What’s behind today’s Ethereum rally?

Ethereum has had a good twenty-four hours, spiking by over 2% to reclaim the $3,400 mark. The top reason for the surge, of course, is the hype and anticipation for spot Ethereum ETFs.

They’re expected to launch some time during the first half of this month. Data shows us a heightened trading activity and a small buying spree during morning hours UTC.

Ethereum bulls go crazy

Taking a look at Ether’s trading chart with key technical indicators, we see that the Volume-Weighted Average Price (VWAP) line fluctuates closely with the price, suggesting that most of the trading has been happening around the average price level.

When price consistently trades above the VWAP, it suggests bullish sentiment. The markings show that there was strong buying activity earlier today.

Source: TradingView

The RSI is at 48, which is relatively neutral. This means that despite the recent rally, Ethereum is not yet in overbought territory, so there is still room for upward movement without immediate fear of a pullback.

The MACD line (blue) below the signal line (orange) and both lines are converging towards the zero line, which can be interpreted as a weakening bearish momentum and a bullish crossover.

The OBV_HL lines (blue, yellow, and red) show diverging paths, meaning that while there is heightened activity, it’s not uniformly distributed, reflecting sporadic buying sprees mentioned.

Source: TradingView

Ethereum’s price is fluctuating around the middle Bollinger Band, with occasional breaches towards the upper and lower bands. This indicates a moderate level of volatility.

The recent consolidation around the middle band suggests that the market is in a phase of equilibrium after some price swings, potentially stabilizing before a directional move in response to ETF expectations.

Moreover, the price is also above the Ichimoku cloud. This means the bears are hella comfortable, and completely in control. The conversion line (blue) above the baseline (red) within the cloud further supports bullish sentiment that isn’t deterred by external factors.

What on-chain metrics tell us

On-chain data gotten from IntoTheBlock shows us that the bulls are thriving. Look at the chart below. The difference line hovering near the zero but in the positive territory indicates that bulls maintain an edge over bears.

Source: IntoTheBlock

The chart below shows that many investors have bought into Ethereum at lower prices and are currently seeing their holdings appreciate in value.

Source: IntoTheBlock

There’s also been a reduction in negative sentiment, which leads to decreased selling pressure, as fewer investors feel compelled to sell to cut their losses.

For traders, monitor the market for signs of increased selling pressure or profit-taking. Consider taking positions that leverage the current bullish trend but be prepared to adjust quickly if the sentiment shifts.

For investors, the current trend offers a potentially favorable long-term outlook, especially with the ETF catalyst on the horizon. It might be advantageous to hold and possibly increase positions in anticipation of the launch.

Reporting and analysis by Jai Hamid