NewsBTC technical analyst and editorial board member Tony “The Bull” now believes that Ethereum (ETH), now the second most valuable cryptocurrency, is about to explode. “The Bull” cites the technical candlestick formation on the ETHUSDT daily chart as a leading indicator for ETH. ETH is currently trading above $3,000, its highest level in two years.
analyst pointed Applies to Bollinger Bands (BB), a technical indicator used to measure volatility. Although BB is a lagging indicator, like most technical indicators, including moving averages, traders associate each narrowing band with increasingly lower volatility.
As history has shown, these “squeezes” often precede key breakout levels (in either direction) that can shape how the price develops in the following sessions. However, this changes whenever the band begins to expand. Typically, when this happens, the price of the asset (in this case ETH) is likely to rebound.
Looking at the ETHUSDT monthly chart, the price is rising. Despite general optimism across cryptocurrency markets, the price of ETH has been within a tight range over the past few weeks. As a result, what is clear from the monthly charts is that a short period of price consolidation has resulted in a “squeeze.”
As ETH moves higher, we start looking for the second most valuable coin. It is trading above $3,000 and is trending towards April 2022 levels. Notably, the coin is in a breakout formation as the price significantly surpassed the January 2024 high in February.
Optimism for further price rises comes from monthly chart developments. This suggests high volatility as the bands begin to widen and the monthly bullbar forms a band along the upper BB. Technically, whenever there is a cluster of bars along the upper BB, it means there is strong upward momentum. Therefore, based on this configuration, management believes that what is happening on the ETHUSDT monthly chart could be a precursor to an “explosion.”
Pay attention to the US SEC
What could further fuel an uptick that could push the coin above $3,500 is how the U.S. Securities and Exchange Commission (SEC) reacts to the current spot Ethereum exchange-traded fund (ETF) application. The approval of a spot Ethereum ETF could lead to increased institutional investment in Ethereum.
As evidenced by how institutions reacted to discover Bitcoin ETFs, Ethereum-like products could see billions of dollars flowing into the coin. Increased institutional investment could potentially push the price of ETH higher.
As Reddit prepares to go public, filings with the U.S. SEC show that the social media platform plans to use excess cash to accumulate Bitcoin (BTC), Ethereum (ETH), and Polygon (MATIC).
Featured image from Canva, chart from TradingView