- Gas fees on Ethereum network appear to have bottomed out and are now rising, indicating increased network usage.
- ETH has twice found support at US $1,550 recently; technical analysis shows possible breakout to US $3,000.
- Capital is rotating from BTC into ETH and other alts, suggesting the possibility of a continued surge in altcoins.
A recent bump in Ethereum network revenue and a a reversal of negative price action may signal that ETH is set to surge over US $3,000 (AUD $4,660) in the coming months according to a report from Markus Thielen, head of research and strategy at digital asset investment firm Matrixport.
Ethereum’s price action has been sluggish in recent months relative to BTC, declining against the largest cryptocurrency by 15% since August. It has also underperformed compared to many altcoins.
Report Finds Reasons For Positivity
In his report Thielen cites an increase in Ethereum network revenue as the key signal that ETH may be poised for a rally. Ethereum gas fees are back to where they were in the middle of 2023, around US $30 million (AUD $46 million) per week, having recovered from a low of just over US $12 million (AUD $18.6 million) in the early part of October.
This increase in network activity is also reflected in transaction volume, with US $250 billion (AUD $388 billion) worth of on-chain transactions being settled in the past week, the highest level since March.
Thielen’s analysis also points out that ETH has twice found support at just under US $1,550 (AUD $ 2,406) in the previous two months, providing a solid base that has allowed it to regain strength and climb to over US $1,700 (AUD $2,639).
He argues that as long as weekly network revenue remains above US $30 million (AUD $46.5 million) and the price stays above US $1,800 (AUD $2794) investors should stay long on ETH. According to CoinGecko ETH is currently changing hands at US $1,887 (AUD $2,929)..
Bitcoin Dominance Drops, Futures Funding Up
Bitcoin dominance has dropped over the past week, indicating that capital is rotating out of BTC and into higher-risk cryptocurrencies such as ETH and other altcoins. According to Thielen this trend indicates that the market may be entering a phase where ETH and other altcoins outperform BTC.
Perpetual futures funding rates for BTC and ETH are also up in the past two weeks, rising from the 5-10% rates they’ve sat at for most of 2023 and pushing into the 10-20% range. Thielen suggests this may also be a bullish signal for altcoins as this positive sentiment could lead to an further increase in the flow of capital from BTC into alts.
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