Ethereum prices rallied on Tuesday as a recent sell-off in the cryptocurrency market prompted traders to buy the dip.
The world’s second-largest cryptocurrency climbed to its two-week high of $1,859.62 on Coinbase, a US-based crypto exchange, during the early Asian session. It started correcting lower on short-term selling sentiment but maintained its weekly upside bias on supportive in-house and macroeconomic factors.
Ethereum’s upside move mostly appeared in line with a similar price jump in the Bitcoin market. The correlation efficiency between the two assets is nearly 0.88, reflecting that Ethereum is most likely to tail trends in the Bitcoin bazaar.
Ethereum correlation with Bitcoin. Source: ETHUSD on TradingView.com
In retrospect, Bitcoin rallied this week after gaining entry into the balance sheets of Meitu, a Chinese photo-editing app, and Aker ASA’s new cryptocurrency wing Seetee AS. Its gains also surfaced as US government bond yields showed signs of calming down after rallying relentlessly in the past two weeks.
Many analysts noted that a rise in bond rate returns sapped investors’ appetite for assets that performed exceptionally well during the coronavirus pandemic in 2020. That includes bitcoin, gold, and tech stocks; all of them rallied due to the Federal Reserve’s unprecedented dovish monetary policies. Higher yields suggested that the US central bank might hike interest rates in the future.
Ethereum also plunged alongside Bitcoin as the bond yields surged in the week ending February 28. But the cryptocurrency has since retained its upside bias and is now eyeing $2,000 as its next bullish target. On the other hand, Bitcoin bulls have settled a similar upside target near $60,000.
‘Ethereum is clearly mirroring Bitcoin’s performance, indicating a strong correlation, with the only difference being that it sees a lot of smaller fluctuations while following the same big path that BTC is taking,’ Greg Waisman, the co-founder/COO of payment firm Mercuryo, told NewsBTC in an email response.
‘If BTC’s dominance remains strong, then Ethereum is likely to stay correlated,’ he added.
The technical structures on Ethereum’s shorter timeframe charts suggest extended rallies for the cryptocurrency.
Ethereum corrects lower after testing the mid-Feb resistance range. Source: ETHUSD on TradingView.com
The ETH/USD now tests the February 12 resistance area for a bullish breakout attempt. A successful close above the range puts the pair en route to its previous high at $2,041. Meanwhile, a pullback would have traders test $1,750 as its next support target, with an extended breakdown leading to the 200-4H moving average (the orange wave).
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