The price of Ether has exploded to reach highs above $730 in a major overnight rally. This second-biggest crypto broke out against Bitcoin. ETH reached $730 for the first time since May 2018. Following that breakout, the traders are becoming quite optimistic in the crypto’s short-term trajectory.
Two major factors are believed to have underpinned ETH’s major rally: the CME Ethereum futures listing in January 2021 and a strong technical market structure.
‘Higher High’ Pattern Forming In ETH Market
Based on technical analysis, the developing higher high pattern normally shows that there is strong momentum in the market since it indicates every new peak is higher than the previous top.
Ether has constantly rallied in the last week, sustaining the higher high pattern formation. One crypto trader Scott Melker said:
“Endless series of higher highs and higher lows, with the most recent low confirmed by a fresh higher high. I deem this pattern the ‘Stairway To Heaven.’”
One full-time trader at the Amsterdam Stock Exchange, Michael Poppe, said on December 28, 2021, that $1,200 to $1,300 is likely for Ether if it manages to stay above $470. He wrote:
“In general, #Ethereum still has a very bullish outlook as it’s been making higher highs and higher lows consistently. This didn’t change. As long as $470 holds, the next run will bring the markets towards $1,200-1,300 or a new ATH in Q1 2021.”
Ever since BTC exploded past its previous all-time high at almost $20K, ETH has stagnated against Bitcoin. Therefore, for Ether to experience a renewed rally, a sustainable breakout against BTC is crucial.
Looking at the daily chart, ETH has begun to show some gains against BTC, which may underpin the newfound demand for Ether. Santiment analysts stated that ETH miner balances are at a two-year low and the supply on the crypto exchanges is also dropping.
The combination of these two data points indicates that the selling pressure on Ethereum is plunging. They explained:
“On what is normally the slowest trading day of the week, #Ethereum cracked $700 on a great #altcoin Sunday for the first time since May 19, 2018. $ETH miners balances are at a 2-year low & supply on exchanges at a 1.5-year low. Both great validators.”
What Comes Next?
In the meantime, futures on the Chicago Mercantile Exchange (CME) are set to launch in six weeks. Based on data acquired from Bybt.com, the CME is already the biggest futures exchange for BTC with regards to open interest.
By description, open interest refers to the cumulative total amount of capital that gets actively traded on the exchange. As of December 28, 2021, the CME BTC futures exchange’s open interest is oscillating above $1.67 billion.
Some of the analysts and commentators say that the institutional demand for bitcoin will eventually spill over into the Ethereum market in 2021. If that happens, the CME Ethereum futures exchange might see considerable growth in daily volume and open interest. One researcher at Messari, Ryan Watkins, stated:
“2021 prediction: In 2021 we begin seeing institutions buy $ETH Once you accept that Bitcoin may be valuable, it opens your mind to the possibility that other crypto-assets may also be valuable. It’s a much easier jump from $BTC to $ETH from there.”