(DAILY NOTION): ETH/USD: Will it Move Higher..or is a Correction Coming? Next Mover: Biden Stimulus Package, Bitcoin Dominance

Source: Yahoo Finance

It is a big day for the rising star of digital currencies, Ethereum, as the Chicago Mercantile Exchange (CME) launched Ether futures. The CME, which was founded in 1898, is an organised exchange for the trading futures and options. It is certainly a feather in Ethereum’s cap, as it takes its place along with Bitcoin futures and options on CME’s list. Business Insider reports that cryptocurrency fund manager, Grayscale, has also reopened its Grayscale Ethereum Trust, and has since an inflow of 100,000 ETH. With that, Grayscale now manages nearly $5 billion in Ethereum.

Let’s take a look at its technical analysis. Upon hitting a low of $1,501.75 on Feb 7, ETH/USD gained momentum to rise to $1,624.99 during the early trading hours of today. However, it took a dip thereafter, and at the time of writing, the price is at $1,593.36.

Although the Moving Average Convergence Divergence (MACD) indicates a bearish trend, it is to be noted that ETH/USD has been trading above its 50-day Moving Average (MA), which could favour the cause of the buyers. Furthermore, The Relative Strength Index (RSI) has taken a nosedive from an overbought condition of 81, which it achieved earlier today, to the present 51.

Analyst Anil Panchal of FX Street opines that key resistance levels lie at $1,675 (a downward sloping trend line from Feb 5) and $1,763.93. Meanwhile, on the downside, key support levels lie at $1,535 and $1,428 (a confluence of 100-bar Simple Moving Average (SMA) and ascending support line from Jan 22).

However, in a recent statement, analysts from JPMorgan believes that a correction could be on the horizon. This is a sentiment also expressed by analysts Michael Van De Poppe from Coin Telegraph, a sentiment which was based on Bitcoin’s correction after being listed on the CME.

In the meantime, the Biden stimulus package continues to progress further as the U.S. House has approved a key budget bill that paves the way for the Democrats to pass the Biden Stimulus Package without Republican support. This progress clearly cheered the market and was reflected in Wall Street’s upbeat performance on Friday.

Aside from a rising risk-on sentiment, Ethereum also faces challenges from the current flagship cryptocurrency, Bitcoin, which might not also relish its dominance so easily and could be putting up a fight to retain its position. If Bitcoin's star continue to shine, a FOMO (fear of missing out) sentiment could lure traders away from Ethereum and into Bitcoin.

In summary, as Ethereum endeavours to stamp its reputation, it faces a near-term challenge in terms of bullish Bitcoin prices and increasing risk-on sentiment in the market. Let’s keep an eye on this space.

ETH/USD (as of Feb 8, 2021, 10.00 a.m., GMT +8) - $1,593.36.