Ethereum price momentum waned on Wednesday as investors reacted to the improving market conditions. ETH surged to a high of $1,612, the highest level since November 6 last year. It has jumped by more than 47% from the lowest point in December. So, what next for ETH prices?
Fear and greed index rises
Ethereum has been in a strong bullish trend in the past few weeks as the mood in the crypto market improves. This rise has coincided with the sharp increase of other coins like Bitcoin, Litecoin, and OKB.
Crypto prices have surged for several reasons. First, it rallied because of the falling inflation in the United States. Data published last week showed that the headline consumer price index (CPI) dropped from 7.1% in November to 6.5% in December.
Core consumer inflation also dropped to 5.7% in December. This means that inflation has dropped in the past six straight months. Further, wage inflation has started moving downwards even as the unemployment rate dropped to 3.5%.
Therefore, investors believe that the Federal Reserve will start to shift its interest rate policies in the coming months. The Fed hiked rates from between 0 and 0.25% in January 2022 to over 4% in December. Therefore, with inflation falling, there is a likelihood that the Fed will shift its tone.
Second, the fear and greed index has moved from fear to greed recently. The one tracked by CNN has moved to 65 while the crypto fear and greed index has risen to 52. Historically, Ethereum and other cryptocurrencies thrive when the index is rising.
Third, Ethereum has seen the total value locked (TVL) in Ethereum surge to about $27 billion, Lido’s TVL has surged by 31% in the past 30 days while Convex and Aave have seen their TVLs jump by over 25%.
Ethereum price prediction
The daily chart shows that the ETH price has been in a strong bullish trend in the past few days. As it rose, it moved above the upper side of the descending channel shown in black. The coin also rose above the key resistance level at $1,354, the highest point on December 15.
It also jumped above the 25-day and 50-day moving averages while th Relative Strength Index (RSI) moved to the overbought level. Therefore, the coin will likely continue soaring as buyers target the key resistance at $2,000.
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