In mid January 2021, our readers were notified that Ethereum (ETHUSD) was on track to make all time record highs. The weekly chart looked prime, and Ethereum price was breaking above major weekly resistance zones. Very powerful price action. Long time readers and followers of Market Moment will remember our call to long Ethereum on a double bottom pattern trigger breakout back around $340.
Many eyes have bene focused on stocks such as Gamestop (GME), Nokia (NOK), BlackBerry (BB), AMC Entertainment (AMC), Naked Brand Group (NAKD) just to name a few. Really the WallStreetBets short squeeze plays. But there have been a lot of crypto activity in the alt coins. Alt cryptocurrency DOGE coin had a 300% weekly jump last week, thanks largely to an Elon Musk tweet, but also to the retail crowd on Twitter. Cryptocurrency is not to be mentioned on WallStreetBets under their guidelines.
XRP had a very nice run up to 0.76 before getting clapped. Bitcoin has made a nice run and has closed back above our 34,000 zone. The story is Ethereum’s breakout into new highs, which it continues to make as I write this article on Wednesday morning.
So why new highs? Many contribute it to Ethereum 2.0. The crypto community sees Bitcoin as the store of value or safe haven, similar to Gold, in the crypto space.
Ethereum on the other hand is seen as the currency for the internet. The real currency to be used as money. Ethereum 2.0 addressed, and to some, confirmed this.
Knowing this, on the value side, a lot of traders and investors think Ethereum is still cheap compared to Bitcoin. And they expect more record highs to continue being printed.
My readers know my opinion on cryptocurrency: you should own some. I am bullish crypto because it is a way out of fiat currency. I like both precious metals and cryptocurrencies, and I think both will be winners in this environment. With all this money printing on the monetary and fiscal side to combat covid, a currency war has begun between central banks. All central banks want to weaken their currency to boost inflation and exports…not to mention to handle the amount of debt they have. With the US Dollar dropping, other fiat currencies have been appreciating which those central banks do not want. Micro cuts, cuts to negative rates, and in some cases, cuts deeper into the negative, are what comes next. The tools in the central bankers toolkits are running out. We should expect more money printing for the future. It cannot stop and will not stop.
Another key point on Ethereum is that Ethereum miners have churned in a record profit for January 2021. Miners earned $830 million for the month of January as network fees, activity and the price of Ether soared. Something we have not seen since 2018.
The weekly chart is showing price breaking higher and eclipsing 2018 highs. Breakouts have three scenarios:
- Either the momentum continues as new buyers come in and chase the move.
- We pull back to the breakout zone at 1400 to RETEST it. Buyers step in at 1400 and then price continues the momentum higher.
- Price pulls back to the breakout zone at 1400 to RETEST it. Buyers attempt to hold 1400 but fail. Price closes lower and we get a fake out breakout.
Breakout and retests are normal. We should expect price to eventually retest its breakout zone even if momentum carries price forward. 1400 is the key number. As long as we remain above 1400, the upwards momentum continues.
Just a reminder: the chart is the weekly chart, so the current candle does not close until the end of the week. Meaning Ethereum prices could still fall and we do not close above 1400. But currently, the price action is very strong.
In my last Market Moment post on Ethereum, I posted a chart with fibonacci which gave us targets to the upside. I have posted it again above.
The first target on this breakout comes in a 1757 ( we can say the 1750 zone). We could see some selling and take profit there. If we close above 1750, 2000 is a big important psychological number to watch for, but we have a fib extension coming in at 2294 (2300 zone).
Keep your eyes on this. This Ethereum breakout has been highly anticipated. It has been 3 years in the making.