ETH/USD surges ~50% in a week as ETH 2.0 nears - Where next?
The world’s second-largest cryptoasset had a brutal second quarter of the year, with ETH/USD prices falling over 75% from nearly $3600 at the start of April to a low under $900 by mid-June. Between the bankruptcy of so-called CeFi lenders (essentially crypto banks without insurance) like Celsius and Voyager, the implosion of the massive Three Arrows Capital hedge fund, and a worsening macroeconomic backdrop, sentiment toward the entire cryptoasset space understandably collapsed.
As optimists everywhere are fond of saying, the night is darkest just before the dawn, and we’ve seen at least a couple tentative reasons for optimism on the horizon. For one, the macroeconomic backdrop has at least stopped deteriorating for the moment, with many traders speculating that the US may be at peak inflation and that the FOMC will raise interest rates “only” 75bps this month.
More directly to Ethereum, the Ethereum Foundations core developers have finally set an initial date for the network’s highly-anticipated merge to ETH 2.0, in which Ethereum will shift from the energy-intensive proof-of-work consensus mechanism to a more energy-efficient, scalable, and potentially outright deflationary proof-of-stake backing. With developers setting their eyes on a September 19th transition, the market has started pricing in this long-awaited bullish catalyst, driving ETH/USD up nearly 50% in less than a week.
On a technical basis, ETH/USD is now peeking above its 2018 high near $1430, potentially clearing the way for continued strength toward previous-support-turned-resistance in the $1700 area next. That said, the broader policy environment has merely stopped worsening for the moment, rather than shifting to the supportive backdrop that drove prices higher throughout most of Ethereum’s existence, so there’s still risk that this is merely a sharp bear market rally. Only if prices are able to climb durably above $1700 again will longer-term bulls start to consider the potential for a new ETH bull market.
As optimists everywhere are fond of saying, the night is darkest just before the dawn, and we’ve seen at least a couple tentative reasons for optimism on the horizon. For one, the macroeconomic backdrop has at least stopped deteriorating for the moment, with many traders speculating that the US may be at peak inflation and that the FOMC will raise interest rates “only” 75bps this month.
More directly to Ethereum, the Ethereum Foundations core developers have finally set an initial date for the network’s highly-anticipated merge to ETH 2.0, in which Ethereum will shift from the energy-intensive proof-of-work consensus mechanism to a more energy-efficient, scalable, and potentially outright deflationary proof-of-stake backing. With developers setting their eyes on a September 19th transition, the market has started pricing in this long-awaited bullish catalyst, driving ETH/USD up nearly 50% in less than a week.
On a technical basis, ETH/USD is now peeking above its 2018 high near $1430, potentially clearing the way for continued strength toward previous-support-turned-resistance in the $1700 area next. That said, the broader policy environment has merely stopped worsening for the moment, rather than shifting to the supportive backdrop that drove prices higher throughout most of Ethereum’s existence, so there’s still risk that this is merely a sharp bear market rally. Only if prices are able to climb durably above $1700 again will longer-term bulls start to consider the potential for a new ETH bull market.
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