The price of Ethereum erased most of the gains made in 2021 as concerns about digital currencies grew. The coin fell to an all-time low of $881 in June and then began a slow recovery and rose above $2,000 in August. ETH was trading at $1,703 on Friday, up nearly 93% from this year’s low.
Ethereum Merge is the main catalyst
Ethereum The price has corrected strongly over the past few weeks as investors focus on the upcoming merge event. This will be the biggest transition in the blockchain industry as it will see the network move from a proof-of-work to a proof-of-stake platform. This will merge the current version with the Beacon series.
As a result, Ethereum mining will not be possible. Instead, the network will use a set of validators to confirm or deny transactions. Furthermore, the new network will set a platform for further upgrades in the future that will make Ethereum faster and more cost-effective. For example, Ethereum will introduce sharding, a technology used by blockchains such as Elrond and Near Protocol.
Historically, cryptocurrencies have rebounded towards a major uptrend or event. For example, bitcoin always rebounds before the halving event. Nevertheless, it is still unclear whether ETH will continue to rise after the merger.
Like other cryptocurrencies, the price of Ethereum is also being influenced by other factors. to like BitcoinThe coin is being influenced by the monetary policies of the Fed. This year, the bank has maintained an extremely rigid tone, which has seen interest rates rise by 225 basis points and has introduced a quantitative tightening policy.
In addition, Ethereum’s ecosystem is shrinking. The Total Value Lock (TVL) in its DeFi ecosystem has fallen while the value of NFT trades has fallen sharply.
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Ethereum Price Prediction
The daily chart shows that Ethereum price has been in a strong bullish trend over the past few weeks. Also, it managed to move above the crucial resistance level at $1,281, which was the highest level on June 26.
The pair has also moved above the 25-day and 50-day moving averages, which is a bullish signal. However, a closer look reveals that it has formed a small head and shoulders pattern. Therefore, the coin is likely to retreat in the coming weeks as investors sell off the fact. If it does, the next major reference level will be $1,281.