- Ethereum rallied to just below $1,700 after closing at $1,664, a new all-time high
- Ethereum’s rally began when it dropped to $80 in March 2020
- Every $100 level upside at this point would be tough for Ethereum, an analyst warned
Ethereum has hit a new all-time high but it looks like a pullback could happen first, followed by a consolidation period.
Ethereum closed Thursday at $1,664, its highest at any point in time and it was followed by a rally to just below $1,700 on several exchanges. The potential for the second-largest cryptocurrency to reach $2,000 is still on the horizon, but every $100 level might be tough, just as it was on the road to $1,600.
According to Tim Enneking, managing director of Digital Capital Management, $1,600 could turn to support but it would break if it doesn’t get sustained. He added that the resistance above is much tougher to predict. “On the way up to break $1,600, every $100 was tough and that will almost certainly continue to be the case,” he added, noting that $2,000 will be a very strong resistance and if it gets hit, a consolidation period will follow, Forbes reported.
Similar to Bitcoin, Ethereum had a parabolic run in 2020. After dropping to $80 in March 2020, the price went up to $1,600 in just ten months. At the time this article is written, the cryptocurrency is up 31 percent in the last thirty days and 119 percent since the year began.
If Bitcoin’s increase is attributed to the narrative that it is the digital version of gold, Ethereum is banking on the numerous applications that developers build on top of it as the driver of its value. Virtually all the work surrounding decentralized finance or DeFi, which aims to remove the middleman in financial transactions, is being done on the Ethereum blockchain.
The increasing interest in Ethereum culminated in higher gas fees as transactions continue clogging the network. But these gas fees are the reason why Ethereum is also valuable. According to Fundstrat Global Advisors, Ethereum is the best risk/reward investment play in cryptocurrency because of gas fees and decentralized finance. The only possible risks at this point are delays to the blockchain’s transition to Ethereum 2.0 and a potential bear market.