Ethereum breaks out of month-long range
Important takeaways
- Ethereum broke out of its range today and is currently trading at $1450.
- Strong stock indices and a weak dollar may have set the stage for the coin to pump.
- Ethereum’s deflationary monetary system may also have had an influence.
Share this article
Ethereum briefly touched $1,500 today as it broke out of the tight range it had been trading within since mid-September.
Setting the stage for a rally
Ethereum is getting some tailwind.
The second largest cryptocurrency is currently trading at $1,450, up 8.5% in the last 24 hours, according to CoinGecko. The coin had been stuck in a range between roughly $1,405 and $1,240 for more than a month now. While it is too early to tell if ETH has broken out of this range for a prolonged period, it is the first time the currency has visited these price levels since the historic consolidation on September 15th.
ETH’s pullback is likely attributable to broader market conditions. The S&P 500, Nasdaq and Dow Jones are all in the green for a third straight day, having increased in price by 1.32%, 1.86% and 0.86% respectively. The crypto market has shown a close correlation to the stock market for most of the year; in the past month, it proved even more resilient, as all three of the major US stock indexes made fresh lows in mid-October, while Bitcoin and Ethereum stubbornly remained confined within their range.
Most notably, the US dollar now appears to be consolidating. After reaching a peak of 114.6 points on September 27, DXY is now trading at 110.9 points and may be showing signs of reversal. The US dollar’s continued strength throughout the year has been largely resistant to equities, cryptocurrencies and foreign currencies such as the euro, British pound and Japanese yen. It may now slow down after the Federal Reserve knew signs of possibly slowing the pace of rate hikes soon.
Still, macro conditions aren’t the only thing driving Ethereum forward. Open interest in ETH also increased dramatically in recent hours. According to crypto research platform Delphi Digital, nearly $500 million in ETH became perpetual futures contracts bought on Coinbase in under an hour, which immediately sent prices pumping from $1,350 to $1,380.
Finally, ETH may benefit from a reduction in its total supply. Even after it moved to Proof-of-Stake, Ethereum’s ETH emissions held undulatingwith data from ultrasound.money shows that by October 8, ETH’s total supply had increased by 13,086 tokens in 23 days. However, increased activity on the chain has led to the blockchain’s monetary policy becoming deflationary, and ETH’s total supply is now close to what it used to be on September 15th.
Disclaimer: At the time of writing, the author of this piece owned BTC, ETH and several other crypto assets.
