Over the past week, Ethereum (ETH) made another new all-time high (ATH), increasing its market capitalization to about one-fourth that of Bitcoin.
ETH hashrate also continues to show new ATHs almost daily.
This suggests that miners who would otherwise currently be mining at a loss believe in the future of the coin enough to continue spending infrastructure dollars adding to the hashrate. Similarly, Bitcoin’s periods of rapidly increasing hashrate also suggest a bullish medium- to long-term future.
However, Ethereum technicals tell another story. Despite making a higher high in price, it has done so on less volume and on a decreasing Relative Strength Index (RSI), an oscillator measuring momentum. This suggests that bullish buying pressure is waning and the probability of a pullback is higher than the probability of continuation. In short, buyers are exhausted.
Second, there is a Rising Wedge forming, a bearish reversal pattern seen at the top of a trend, with confluence of support near the 200 EMA and 50 percent Fibonacci retracement zone, ~$32. The distance from the 200 EMA also suggests price is due for a reset. This could also be interpreted as price being heavily overbought. It has not touched the 200 EMA since January 9.
The descending volume profile also suggests this is a period of consolidation. Watch for confirmation of a break up or down from the Rising Wedge with a spike in volume. This pattern should break down but it does not mean breaking up is an impossibility.
Last, a modified candlestick known as Heikin-Ashi is also showing decreased momentum in this price zone.
Large green bars indicate strong bullish momentum, smaller green bars waning momentum and red bars a flip in momentum. The candles bringing price to the new ATH were not as strong as the previous candles. Again, this can be read as a type of bearish divergence with a higher high in price but with weakening momentum.
Should a Bitcoin hard fork occur, ETH may be seen as a safe haven asset for the time being. If so, expect price to easily soar to between $65 and $80, according to the Fibonacci extensions of the entire trend.
Summary
1. ETH hashrate is growing at an explosive pace, indicating miners’ bullish confidence in ETH’s future.
2. Price made a new ATH on weakening bullish momentum. Expect a pullback to ~$32, a zone with confluence of support, in the near to medium term over bullish continuation.
3. Should a Bitcoin hard fork occur, expect this to be a bullish event for ETH with a Fibonacci extension target of $65–80.
Trading and investing in digital assets like ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTCMedia related sites do not necessarily reflect the opinion of BTCMedia and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.