Ethereum Breaking Above $2,600 – Brace For a Bounce-off
The ETH/USD pair ended the day at $2697.29, with a high of $2809.39 and a low of $2641.71. After remaining green for five consecutive sessions, ETH/USD dropped on Wednesday, despite having some positive developments surrounding its ecosystem. The Indian Finance Secretary, TV Somanathan, has said that Bitcoin, Ethereum, or Non-Fungible Tokens (NFTs) will never become legal tender in India. These comments came a day after the Finance Minister of the nation, Nirmala Sitharaman, announced a 30% tax on virtual digital assets.
According to Somanathan, crypto assets are assets whose value will be determined by people, but the government will not authorize them. He said that people investing in crypto must realize that their government does not authorize the crypto and that there will be no guarantee whether their investment will be successful or not. He said there might be losses, and the central government would not be responsible for the losses. These negative comments added to the negative market mood and weighed on ETH/USD prices on Wednesday.
Meanwhile, a platform that enables users to donate cryptocurrency to an array of charitable organizations, The Giving Block, announced on Wednesday that it facilitated more than $69 million worth of crypto contributions in 2021. The figures showed an increase of more than 1,500% over one year, as in 2020, the same figures were at $4.2 million.
The co-founder of the Giving Block, Pat Duffy, said that more than $12.3 million was donated by known NFT projects. He further stated that Ethereum surpassed the number of donations made in 2021 for the first time, surpassing that of donations made by BTC. The ETH donations totaled $30.8 million, while the BTC donations were about $25.9 million in 2021. This report added some support to the declining prices of ETH/USD.
Furthermore, according to a blockchain analytics firm, Santiment, the Ethereum fee has fallen below $5 per simple transaction. It was down from $35 in November and May when the fees were around $5,000. The data also revealed that the transaction volume has declined to 1.17 million transactions a day from May’s 1.7 million transactions a day. The reduction in fees was attributed to the increased use of Layer-2s. This report also provided some support to the prices of ETH/USD on Wednesday.
On the other hand, a report suggested that a minor mistake cost about half a million to a trader while investing in Ethereum. An Ethereum trader explained that he lost about $500,000 by sending WETH to WETH’s contract address. Multiple members of the Ethereum community raised the alarms after this report of a minor mistake which may suggest that the risk of errors like these will make it harder for the network to grow. Some recommended that wallets ban transfers to the address in question or give users a warning. The Ethereum community’s excitement put downward pressure on the ETH/USD price.
Ethereum (ETH/USD) – Technical Outlook
The technical side of Ethereum has turned bullish, with the ETH/USD breaking through the double top resistance level at $2,650. As a result, the chances of the uptrend continuing remain high.
The crypto pair may face immediate resistance between 2,800 and 2,890. A break above this opens up additional buying opportunities until the 2,976 level, while support remains at the 2,656 level.
The MACD also supports the buying trend, so take buy trades above $2,650 to target $2,800. Best wishes!
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