Summary
- ETH is now back to “normal” price territory, but its recent market maneuvers mean that a bullish run is still lurking.
- The cryptocurrency will likely maintain a long-term four-figure return against USD.
For the fifth day in a row, Ethereum traded below the historic $2,000 mark, dimming hopes of a possible attempt at $3,000. The price has increased by over 2,000% from the lowest level recorded in 2020, and the cryptocurrency seems to have established a strong foundation to keep its price in four figures.
Institutional investment in ETH
In the past year, the value of Ether has been on an upward trajectory. This has consolidated its appeal to traditional individual investors and convinced institutional investors to embrace the use of this digital currency.
Last month Ethereum’s price leaped from $90 to a year-high figure just above $1,200. The digital currency has kept on increasing in value and is up 636% in the past year.
In the past few weeks, investors from institutions have emerged as the biggest purchasers of Ether and have been stocking up the cryptocurrency, thus driving up prices. The recent stockpiling of Ether has been fueled by the introduction of Ethereum 2.0, which is designed to increase the productivity of Ethereum.
Furthermore, a couple of investors are opting for Ether rather than Bitcoin. This is because Ether is cheaper than Bitcoin, thus making it the uppermost option for investors seeking affordable substitutes to Bitcoin.
Last year, Grayscale Investments obtained about 756,740 Ethereum. In December, Grayscale Ethereum Trust added around 100,000 ETH to its portfolio. At present, Grayscale handles nearly $5 billion of this digital currency. Market moves of this cryptocurrency investment giant have significantly influenced ETH price rally.
The launch of Ethereum futures by Chicago Mercantile Exchange (CME) earlier this month marked its venture into the mainstream currency exchange territory. The move into ETF was an invaluable breakthrough by a virtual currency. ETH prices were on the rise in the days following the launch.
Many other institutions and leading investment banks, including JP Morgan Chase are also keen on adopting Ethereum’s blockchain technology in their operations. This is yet another pointer to growing institutional confidence in virtual currency.
Other firms and companies that have shown interest in this digital currency include Microsoft, Walmart, IBM, and Amazon.
At the beginning of this year, Visa announced that it would partner with Ethereum to bridge its international network payments to the US Dollar Coin (USDC).
As of December last year, Amazon has been using a managed blockchain that utilizes Ethereum at the core of its operations. With this blockchain, their clients network securely. Their clients also gain secure access to the network.
The downside
The recent rise in Ethereum prices has been largely due to the massive momentum gained from recent institutional investment in cryptocurrencies. Most analysts are convinced that the next big growth trajectory will be largely dictated by the addition of ETH to corporate balance sheets.
As things stand, individual investors are keenly waiting for more corporate purchases of cryptocurrencies in the next few weeks.
A lull in corporate activity in the world of virtual currencies may lead to sell-off by individuals keen to reap the gains made. This could result in the “dumping” of Ethereum in exchange platforms, leading to a downward spiral in prices.
ETH/USD technical view
ETH has set new highs this month and now seems to be consolidating recent gains. There has been about 1.8% price reduction over the past 24 hours. The currency will likely find support at $1,579 and meet the first resistance point at $1,701.
A successful breakthrough at this point will see it attempt a rally towards the second resistance level at $1,848. If ETH/USD breaks through this point, then it is likely to retest the $2,000 mark. Conversely, a fall below $1,579 will likely see a slide towards $1,300.