Ethereum continues outperforming broader crypto market but ‘sell the news’ risks persist

Key Takeaways:

  • Ethereum prices have outperformed the wider crypto market, riding on merge news.
  • However, ETH prices might fall if traders start to sell the news.
Ether prices are popping on the back of the merge event, but will it last?
Ether prices are popping on the back of the merge event, but will it last? Image from pngtree and freepik

NEW DELHI (CoinChapter.com) — Ethereum’s native token, Ether (ETH), has been outperforming the broader crypto market over the past week, likely riding on the back of FOMO generated by the upcoming merge event.

The Merge refers to Ethereum’s shift to a proof-of-stake consensus mechanism from the existing proof-of-work model. Ethereum developers activated the Bellatrix upgrade, the network’s final hard fork before the Merge, on Sept 6.

The Bellatrix upgrade prepares the Beacon Chain to merge with the main network later this month, completing Ethereum’s transition to proof of stake.

Ethereum founder Vitalik Buterin shared that the Merge will likely happen next week.
Ethereum founder Vitalik Buterin shared that the Merge will likely happen next week. Source: Twitter

Vitalik Buterin, Ethereum’s co-founder, shared that the Merge might happen around Sept 13-15.

Ethereum Merge news has traders bullish on ETH prices, helping the prime altcoin prices outpace the most prominent cryptocurrencies’ seemingly flat price action. For example, Bitcoin prices have been floating around $20,000 over the past week.

The performance of the Top 3 cryptos by marketcap over the last week.
The performance of the Top 3 cryptos by marketcap over the last week. Source: Arcane Research

The chart above, compiled with data from Coinbase and Binance U.S., shows Ether prices gained 7% between Aug 30 and Sept 6. Conversely, BTC prices fell 2% in the same time frame, while Binance Coin (BNB) dropped 3%.

Apart from the Merge, macro announcements were one of the main driving factors behind the crypto sector’s price movement. However, with the worsening energy crisis in Europe and the dollar continuing to surge, ETH prices might face macro-led headwinds.

Ether Enjoys Bullish Outlook, But Downside Risks Remain

Ether has outperformed Bitcoin since mid-Jun, surging nearly 50%, while its larger peer remained nearly flat.

Moreover, traders in the crypto derivatives market seem especially bullish on Ethereum’s prospects post-merge price action. A bullish outlook might be that nearly 75% of options contracts expiring after Merge completion are called options.

ERelated: Ethereum (ETH) Bulls Aim Big, Why ETH Could Revisit $2K.

Additionally, Mike McGlone, strategist at Bloomberg Intelligence, said in a note that while hiccups might occur, “ether is unlikely to stop the revolution in finance and markets, and more likely to accelerate the process.”

Crypto analysts believe ETH prices might drop after the merge is completed.
Crypto analysts believe ETH prices might drop after the Merge is completed. Source: il Capo Of Crypto/Twitter

Meanwhile, crypto analyst Il Capo Of Crypto took to Twitter to highlight ‘sell the news’ risks to ETH prices. Sell the news refers to traders booking profits after an asset’s price rises on news or rumors of an upcoming upgrade or development.

The analyst predicted prices to rise sharply till the merge event occurs around Sept 13-Sept 15 and then turn down sharply as a result of traders selling their Ether tokens bought in the run-up to the Merge.

ETH Prices Struggle To Hold Above $1,600

Meanwhile, ETH prices fell for the second consecutive day on Sept 7. Moreover, long wicks on both ends of the daily candle indicate that the bulls and bears struggle to get a foothold in the market.

The recent uptrend also helped ETH prices conquer a four-week-long descending trendline on Sept 2. However, a resistance confluence of Ether’s 20-day exponential moving average (20-day EMA, red wave) and 50-day EMA (purple wave) near $1,630 rebuffed Ether’s upside movement.

ETH has been trading inside a narrow price band of $1,550 and $1,630 since Sept 2.

ETHUSD daily chart with descending trendline resistance and RSI.
ETHUSD daily chart with descending trendline resistance and RSI. Source: Tradingview.com

If the token conquers the resistance confluence of 20 and 50-day EMAs, the resulting momentum would likely catapult ETH prices to target resistance near $1,740 before prices pull back.

Conversely, if ETH prices continue to fall, the token would first test support from the descending trendline near $1,460. Then, a marketwide sell-off might see Ether prices fall nearly 12% to reach $1,360 before recovering.

The relative strength index remains neutral, with a value of 44.85 on the daily charts.

At writing, ETHUSD was trading at $1,548, down 0.66% on the day.

Since you are here, check out why Ethereum co-founder Vitalik Buterin has become a fashion god.

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ethereum, Ethereum continues outperforming broader crypto market but ‘sell the news’ risks persist

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