Ether Prices Bounced Back Today—What’s Next For The Digital Currency?

Ether Prices Bounced Back Today—What’s Next For The Digital Currency?

Ether prices climbed today, rising above $3,200 this afternoon and then staying above that level since then.

The world’s second-most valuable digital currency by market value climbed to $3,263.35 around noon EST, CoinDesk figures show.

Since that time, it has traded within a very tight range, fluctuating between roughly $3,200 and $3,265, additional CoinDesk data reveals.

Following these latest price movements, several analysts offered their takes on the cryptocurrency’s recent volatility and its future prospects.

[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]

‘A Strong Bounce’

“We saw a bounce in the broader digital asset market today,” said Brett Sifling, an investment advisor for Gerber Kawasaki Wealth & Investment Management.

“Ethereum had a strong bounce off the $3,000 support level, which was established in August through October of 2021,” he stated.

“After a rapid decline of nearly ~40% from it’s all time highs, investors are expecting dead cat bounces at major support levels like this one.”

Mark Elenowitz, president of FinTech firm Horizon, spoke to these gains, stressing the key impact made by the recent statements of Federal Reserve Chair Jerome Powell.

“Much of these price movements can be attributed to the Federal Reserve's hawkish policies.”

He claimed that “things are looking up” after the confirmation hearing that Powell had today.

“It seemed things were much less hawkish that what was feared, putting many investors as neutral and more optimistic. However, interest rate hikes are still possible.”

Ben McMillan, CIO at IDX Digital Assets, also mentioned the comments made by the head of the U.S. central bank when describing ether’s recent gains.

“Given how oversold Ether was, a quick bounce back isn't surprising as evidenced by a broad bounce across all risk-assets on the back of Powell's remarks to the Senate Banking Committee.”

While these statements may make the conditions surrounding ether appear bullish, multiple analysts emphasized that going forward, traders should be careful.

“Investors should remember that a new inflation report comes out tomorrow, and high inflation will likely lead to faster and more aggressive interest rate hikes,” said Elenowitz.

“While I am expecting generally upward movement over the next few days, one wrong word by the Fed and the market could come tumbling right back down to where it was at the beginning of the week. As a whole, traders should continue to monitor the basis rates.”

Sifling also encouraged traders to be wary, but because of a different reason.

“I would remain cautious on this bounce and wouldn’t get too excited till we break the downtrend that we’ve been experiencing since the November highs.”

Key Technical Levels

Going forward, analysts pointed out crucial levels of support and resistance.

“Ether still faces a near-term resistance band between $3,300 and $3,600,” said McMillan.

“Breaking through this threshold will be the real test of a robust move back into $4k territory.”

Elenowitz offered a similar take, stating that “I see the next upward resistance level at $3,500.”

He noted that if ether can overcome resistance near this level, “the next major band of resistance should be around $3,900.”

Armando Aguilar, an independent cryptocurrency analyst, also commented, identifying “key resistance levels” as existing between $3,550 and $3,800.

He also pointed out crucial support, stating that it is between $2,800 and $3,000.

“$3k is crucial support level for ETH. If both of these key support levels are breached, we could see ETH reach a low of $2,500 - $2,600.”

Sifling also spoke to this, stating that if ether was unable to maintain its current support level at $3,000, “I’d expect more support at the 2800 and 2500 levels.”

Ethereum 2.0

Going forward, Sifling stressed the key role that Eth2, a group of upgrades designed to provide the Ethereum network with multiple improvements, could have.

This set up updates was created to make many changes, including transitioning to proof-of-stake and drastically reducing energy consumption.

“There is a lot riding on the Ethereum 2.0 network upgrade as the next catalyst,” he stated.

“All eyes will be on this upgrade in 2022 as other blockchain technologies like Solana continue to grow as competitors due to their speed and cheap transaction fees.”

Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and sol.

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