John Isige
Investor sentiment dropped toward the end of January, holding Ethereum price from aggressively pushing to $2,000. The second-largest cryptocurrency boasting $204 billion in market capitalization saw its value slashed to $1,515, as the entire market anxiously waited for the Federal Reserve decision on interest rates early last week.
A gradual recovery has been building from this support, with ETH price reaching an intraday high of $1,674 at the time of writing. All eyes are glued on resistance at $1,700, which if broken, could propel Ethereum price to $2,000.
Ethereum Price Prepares for The Next Upswing Ahead of The Shanghai Upgrade
Ethereum core developers have completed another key step toward the much-awaited Shanghai upgrade. A testnet dubbed Zhejiang was used to simulate withdrawals of staked ETH for the first time and is a significant step closer to making the Ethereum network fully proof-of-stake (PoS).
Zhejiang was designed to allow developers to rehearse the withdrawal process – an important element in the Shanghai upgrade expected to go live in March. “On the Zhejiang testnet, partial and full withdrawals, as well as BLS changes, are included in the execution payload,” Barnabas Busa, a DevOps engineer at the Ethereum Foundation, explained to CoinDesk before adding, “we have a successful fork.”
The process leading to the Shanghai upgrade is still long with, Zhejiang being one of three testnets that must run before D-Day. Testnets are copies of the main blockchain, allowing developers to test changes made to the code before they are implemented on the protocol. The next testnets are Sepolia (likely to happen in a few weeks) and Goerli.
Ethereum Price Is Eager To Breakout – $2,000 Incoming?
Ethereum bulls are knocking on an immediate resistance in the form of a falling trendline, as observed on the daily timeframe chart. A break and hold above this level would change ETH’s technical outlook for the coming days and possibly weeks.
For instance, Ethereum price may need a minor push to the upside to shove the sell signal sent in late February out of the way and usher in a buy signal. Therefore, traders waiting to buy Ethereum may do so as the Moving Average Convergence Divergence (MACD) indicator reaffirms this bullish narrative. The call to buy ETH will manifest as the MACD line in blue crosses above the signal line in red.
Investors are also waiting anxiously for an incoming golden cross to be formed as the 50-day Exponential Moving Average (EMA) (in red) crosses above the 200-day EMA (in purple). A golden cross is often used to corroborate a potentially sustainable uptrend in a tradable asset.
Ethereum price reached a new all-time in 2021 following the formation of a golden cross toward the end of 2022. If history is to repeat itself, investors would start booking their positions while acclimatizing to potential gains eyeing its all-time high of $4,878 in November 2021.
Short-term analysis approves the bullishly rated Ethereum price with a buy signal presented by the MACD. However, $1,700 is still a stubborn resistance that bulls must deal with to free ETH into the next breakout to $2,000
In case the next attempt to close the day above $1,700 fails, Ethereum price may be forced to explore downstream levels in search of more liquidity. The 50-day EMA (in red) is in line to provide support at $1,640. If declines increase, the rising trendline, which has been tested and respected several times since January would come in handy to stop the leg from stretching to $1,600 – a support area strengthened by the 100-day EMA (in blue).
Insight from Santiment based on on-chain data reveals that market participants are expecting crypto prices to drop in February following January’s positive price action. Interestingly, this is a positive signal for the market as “trader skepticism IMPROVES the probability of prices RISING further.”
Prices tend to move in the opposite direction from the general sentimental outlook, bearish in this case. That said, Ethereum price may keep the uptrend intact this week, where a break above $2,000 could trigger FOMO and push the second-largest cryptocurrency to $3,000.
On the bright side, support behind Ethereum price is solid, according to the IOMAP model by IntoTheBlock (ITB). From the chart below, the biggest buyer congestion zone lies between $1,571 and $1,619. Roughly 2.43 million addresses purchased 8.99 million ETH in that range.
Investors within the above cohort and the other green clusters are in profit and would be willing to throw their weight behind Ethereum price as it makes way to $2,000 in the coming days.
The IOMAP shows that bulls have an upper hand, considering the absence of robust resistance zones. With a minor push to the upside, Ethereum price would quickly close in on $2,000.
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This article was written for Business 2 Community by John Isige.
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