Finance

Why is Ether (ETH) price up today?

Ether (ETH) price has gained 5.5% over the last three days and 2.5% over the last 24 hours, bringing the price above the $2,400 level. A bevy of technical and ecosystem-related factors appear responsible for the move, but will they be strong enough to send Ether price above its 20-month high at $2,717?

ETH/USD daily chart. Source: TradingView

Ether’s technical setup backs the current momentum

Ether’s price action since Feb. 5 has seen it flip key levels from resistance to support, including the 50-day exponential moving average (EMA) and the $2,400 level.

The most significant support level for ETH is currently the 50-day EMA, which is currently at $2,312.

Data from on-chain metrics provider IntoTheBlock shows that this level is within the $2,378 and $2,349 price range, where 6.76 million ETH were previously bought by approximately 2.68 million addresses.

The In/Out of the Money Around Price (IOMAP) chart below shows that ETH holds above this level, and there’s a clear path ahead with minimal resistance, offering the potential for upward movement.

ETH IOMAP chart. Source: IntoTheBlock

Ether’s price action on the daily timeframe shows the significance of this dynamic support line. Note that when the price rose above the 50-day EMA in October 2023, it rallied 65% to $2,700.

ETH/USD daily chart. Source: TradingView

A closer look at the daily chart reveals that the moving average convergence divergence (MACD) indicator crossed over on Feb. 5.

Notably, Ether rose above the supply zone at $2,400 on Wednesday, Feb. 7, suggesting a trend change that could see price explore the $2,500 to $2,700 zone.

Related: ETH could reach $27K this bull cycle, expert predicts

Ethereum restaking programs and flow

Ethereum is moving toward attaining its ETH 2.0 vision with the newest Dencun upgrade expected to introduce “proto-danksharding,” a technical feature aimed at reducing the cost of transactions for roll-ups and increasing data availability.

The final test took place on Feb. 7 with the Ethereum network’s biggest changes since the Shapella upgrade almost a year ago taking place on the Holesky testnet.

The upgrade went live at 11:34 UTC and was finalized a few minutes later.

The successful stimulation of “proto-danksharding,” on the Holesky testnet sets the stage for the much-awaited Dencun upgrade which is expected to go live over the next few weeks.

Proto-danksharding, introduces the novel utilitarian concept of Ethereum restaking – an Inherently simple concept where already staked Ethereum is re-staked, with the main aim of making the mainnet more secure while maintaining energy efficiency.

Currently, Ether restaking platforms like Swell, a liquid staking for DeFi protocol,have launched liquid staking tokens (LRT) which offers access to EigenLayer restaking points.

Data from Dune shows that the EigenLayer commands a whopping 46% of the total value locked in liquid staking derivatives (LSD). Swell seeks to leverage this market share by making ETH staked and its Restaked Swell Ether (rswETH) token on EigenLayer available to investors.

Liquid staking derivatives TVL percentage market share. Source: Dune analytics

Potential spot Ethereum ETF approval adds a dash of bullish momentum

After the approval of the spot Bitcoin ETFs by the U.S. Securities and Exchange Commission (SEC) on Jan. 10, market participants are hoping that a spot Ethereum ETF would occur next.

However, on Jan. 25 the SEC delayed a ruling on proposed spot Ethereum ETF applications from Grayscale and BlackRock and again for Invesco and Galaxy’s spot Ethereum ETF on Feb. 6.

The Grayscale Ethereum Trust (ETHE) has risen 84% in the past six months, surpassing the 21% gain in Ether’s price over the same period.

Grayscale’s ETHE fund daily price chart. Source: TradingView

Speaking to Forbes Advisor, Head of Risk and Compliance at Northstake Sebastian Heine says,

“The ultimate expectation for ETHE in the case of an ETH ETF approval is that the ETHE investment fund will be converted to a spot ETH ETF, similar to what we have seen with the Grayscale Bitcoin Trust (GBTC) product.”