Ethereum price rally took a breather on Thursday following a week full of song and dance among crypto investors. The talk majorly centered around the potential approval of Bitcoin spot exchange funds (ETFs), prompted by tale-tale signs of the US Securities and Exchange Commission (SEC) warming up to the idea.
The second-largest cryptocurrency broke out in tandem with BTC, seemingly ending the longstanding downtrend. For the first time since August, Ether traded above $1,800, although it had corrected to trade at $1,781 on Friday from highs around $1,864.
Ethereum Price Consolidates Gains, Will It Breakout Again?
Following the widespread uptake of Ethereum among traders and investors rooting for the bull run, the largest smart contracts token ascending above a falling wedge pattern, as shown in the chart below.
This move marked the first significant breakout above a multi-month trendline that has been in existence since April when the bullish outlook in the early months of 2023 faded at $2,138.
Price action beyond all three applied moving averages, starting with the 21-day Exponential Moving Average (EMA) (red), the 100-day EMA (blue), and the 200-day EMA (purple) encouraged traders to keep their positions open while investors fought the urge to jump on the slightest sign of profit.
The falling wedge pattern breakout was also accompanied by a significant increase in trading volume, creating a perfect environment for a major rally.
Ethereum price currency holds above the 38.2% Fibonacci retracement level, which bulls would be depending on to resume the uptrend.
Traders should proceed with caution but not sell out of panic, considering the Relative Strength Index (RSI) shows signs of a pullback on the cards. If the RSI falls back into the neutral area from the overbought region, declines could ensue, with traders closing their positions to lock in the gains.
The Ethereum Community Eyes Increased Scalability With The Dencun Upgrade
The Ethereum community is looking forward to the release of the Dencun upgrade, expected to increase the blockchain’s stability, according to a report by Goldman Sachs (GS) on Thursday.
According to the report, the upgrade’s “primary impact will be to increase its data availability for layer-2 rollups via proto-danksharding, resulting in a reduction of rollup transaction costs which will be passed on to end users.”
Layer 2 protocols are built on top of the Layer 1 blockchain, in this case, Ethereum, and are often referred to as off-chain systems or even separate blockchains.
Rollups function by processing transactions on a separate faster; they are cheaper, and more scalable blockchains that lodge the transactions onto the parent blockchain (layer 1) later.
The Dencun upgrade will significantly “enhance Ethereum’s scalability via rollups” and is expected to have a positive effect on “gas fees and improve the network’s security.”
This would be the next major upgrade after Shapella which achieved full staking status for Ethereum. In other words, after the upgrade investors were able to withdraw staked Ether on the Beacon Chain together with the rewards earned.
Shapella upgrade became a great boost to Ethereum staking, especially on liquidity staking platforms like Lido and Rocket Pool.
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