Key Ethereum Points:
- Ethereum (ETH/USD) has revealed a rising wedge pattern.
- From a theoretical perspective, it is likely the pair would reverse from its ongoing upward move.
- Traders will watch the Bitcoin market for further cues as rising US Treasury yields continue to influence the short-term sentiment.
Ethereum surged ahead of the New York opening bell, locking steps with its top rival Bitcoin after staying in red throughout the Asia-Pacific and halfway through the European session.
The ETH/USD exchange rate slipped from its intraday high of $1,755 in the morning session Monday. The pair declined by more than 5 percent afterward, setting up an intraday low at $1,664 before rebounding all over again.
What’s Pushing Ethereum Higher?
Most of the time, Ethereum was tailing Bitcoin owing to their long-standing positive correlation against the US dollar. The BTC/USD exchange rate rallied overnight after a Chinese app-maker, Meitu, announced that it bought some $40 million worth of Bitcoin and Ethereum combined, stating that they both serve as viable alternatives to cash reserves.
A day after Meitu’s announcement, Norway-based holding company Aker ASA dedicated $58.5 million worth of Bitcoin to build a new cryptocurrency organization called Seetee AS. The company said it intends to “invest in projects and companies throughout the Bitcoin ecosystem” via the new venture.
The corporate FOMO into the Bitcoin sector served as reminiscent of a flurry of updates in February. Tesla, the world’s biggest electric carmaker, added $1.5 billion worth of BTC to its balance sheet. Meanwhile, MasterCard and Bank of New York Mellon announced crypto-enabled services atop their traditional platforms.
Meanwhile, Ethereum cashed from the attention Bitcoin received and from being at the center of many cryptocurrency projects in the ecosystem—ranging from stablecoins like Tether to decentralized finance protocols. That assisted in raising demand for its native cryptocurrency, Ether.
Technically, Ethereum appeared at crossroads with bulls as it formed a Rising Wedge pattern.
The ETH/USD rates has been rising inside a structure whose trendlines are contracting. Traders perceive it a bearish reversal signal—the price rises until or ahead of hitting the point where the two trendlines converge. Then, it breaks down to the downside.
Further bearish tailwinds to the Rising Wedge theory comes from rising US government yields. An ongoing sell-off in the long-dated government debt market has prompted investors to transfer capital from overvalued assets. They include tech stocks, gold, and cryptocurrencies. Meanwhile, the cash is flowing into sectors that suffered the most during the coronavirus pandemic lockdown. They are energy, travel and hospitality, and banking.
With no signs from the Federal Reserve to cap the rising yields, it is likely the bond sell-off would continue further into the March session. It could limit Bitcoin from extending its uptrend, leaving Ethereum under similar pressure.