Ethereum (ETH) took off over the weekend and has extended its gains during today’s trading session. The second crypto by market cap could extend its gains, as “The Merge” becomes a certainty.
The event that will complete Ethereum’s transition from a Proof-of-Work (PoW) to a Proo-of-Stake (PoS) consensus algorithm, “The Merge” has been set for September 2022. One of the most expected dates in the crypto industry, market participants seem divided on its short-term implications.
At the time of writing, ETH’s price trades at $1,770 with 3% and 5% profits over the last 24 hours and 7 days, respectively. As NewsBTC reported, $1,700 was a critical resistance zone for Ethereum as this level could provide more clues into ETH’s price direction.
If the cryptocurrency manages to flip this resistance level into support, the current bullish momentum might be sustainable and trigger a fresh bull run. The opposite might happen at ETH’s price current levels, the market could see a bear assault with new strength.
The above is based on an idea from Jarvis Labs looking at Ethereum’s 30-day returns, a metric used to measure the short-term profits and losses from crypto investors over that period. 3 weeks ago, this metric was trending toward 0% after moving in negative territory for a while.
In the past, whenever Ethereum flip its 30-day returns into positive territory, above 0%, the cryptocurrency’s price traded to the downside for a long time. Thus, why it’s critical that ETH’s price reaches higher levels.
Former Goldman Sachs employee Raoul Pal believes ETH’s price will return to a “path of pain”, in accordance with the theory explained above. Pal believes that market participants have been taking short positions expecting that ETH’s price fails to break above $2,000.
Will Ethereum Fail To Break Above $2,000?
These traders might be in for a surprise if Pal’s prediction is fulfilled as Ethereum could continue to trend upwards beyond expectations:
(…) my view is the bigger battle is around $2300 and the trend channel. Usually, correction channels like this don’t break on first attempt and correct sharply into the range first, but that is something for few weeks time possibly.
In that sense, Ethereum seems on route to fresh gains above key resistance levels, but traders should tread carefully as ETH’s price could re-test the lower channel of the following trend, as Pal said. This could place ETH’s price below its yearly lows at $900.
If that happens, will ETH see long-term bearish pressure, or can “The Merge” push it into previous highs?