Ethereum (Symbol: ETHBTC) could surge by another 50 percent as its price tests a long-term weekly resistance level.
That is, according to Teddy Cleps, a crypto-focused market analyst-cum-daytrader. He spotted ETHBTC inching towards a price ceiling that had historically capped the pair from extending its upside moves. The level also served as strong support during ETHBTC’s correction in 2018.
Ethereum price chart by TradingView.com showing ETHBTC eyeing a breakout move.
Mr. Cleps recalled the level for its tendency to flip Ethereum’s medium-term bias. He noted that breaking above it would kickstart a new buying spree. Thereon, ETHBTC could rise by as much as 50 percent, a move that sets its upside target around 0.055 BTC.
“Clear this weekly resistance and it will be a smooth ride for another 50 percent,” he said.
Studying the same theory on Ethereum’s dollar-focused chart also showed a similar scenario. In it, the ETHUSD exchange rate closed above its long-term horizontal resistance level as of this week. The pair is now eyeing a breakout confirmation, followed by a rally towards its next upside target at $528.
The levels came to light after putting the Ethereum price moves on Fibonacci retracement levels between a swing low of $7.10 and a high of $1,373. Old fractals showed ETHUSD testing the redded level (as shown in the chart below) as resistance on four occasions. It had only one breakout that led the pair to its historic high of $1,424.
Ethereum price chart by TradingView.com showing ETHUSD targeting levels above $500.
This week was Ethereum’s second successful attempt ever to close above the redded resistance level. The cryptocurrency’s jump meanwhile came on strong fundamentals led by the boom of Ethereum-backed stablecoin and decentralized finance tokens.
Bullish Fundamentals and a Warning
The total capital locked in various DeFi projects reached $4.2 billion from $1.1 billion in less than a month. Governance platform Compound reported 5x gains for its COMP token a few days after its launch in mid-June. Lending protocol Aave’s native crypto LEND also rallied 600 percent from its May nadir.
Other DeFi tokens also reported such triple-digit percentage gains.
The craze helped Ethereum network rise in terms of transactional throughput. ETH posted volumes higher than the ones delivered by BTC for several days in a row. DeFi, in a way, mimicked the growing adoption of Ethereum as a blockchain that helped its native token ETH rise higher.
DeFi token performance sourced by Messari.com
Many observers also warned about a potential DeFi bubble burst. The sector’s rally this year appeared overblown against the possible valuation of the startups that it features. FuturesMag noted that the DeFi boom is similar to the 2017’s notorious ICO frenzy.
The price of Ethereum had crashed by 94 percent from its record high following the ICO bubble burst.