Favorable broader market conditions seem to have finally pushed Ethereum past the $1,400 price mark.
Key Takeaways
- Ethereum broke out of its range today and is currently trading for $1,450.
- Strong stock indices and a weak dollar may have driven the coin to pump.
- Ethereum’s deflationary monetary system may also have had an influence.
Ethereum touched $1,500 today as it broke out of the tight range it had been trading within since mid-September.
Setting the Stage for a Rally
Ethereum is picking up some tailwinds.
The second largest cryptocurrency is currently trading for $1,450, up 8.5% in the last 24 hours, according to CoinGecko. The coin had been stuck between approximately $1,405 and $1,240 for more than a month. While it’s too early to tell whether ETH has broken out of that range for any sustained period, it’s the first time the currency has visited these price levels since the historic Merge on Sept. 15.
ETH’s bounce is probably attributable to broader market circumstances. The S&P 500, Nasdaq, and Dow Jones are all green for the third day in a row, having increased in price by 1.32%, 1.86%, and 0.86%, respectively. The crypto market has shown a close correlation to the stock market for the majority of the year; in the last month, it proved even more resilient, as all three of the major U.S. equity indices made new lows in mid-October, while Bitcoin and Ethereum stubbornly remained confined within their ranges.
Most notably, the U.S. dollar appears to now be consolidating. After reaching a high of 114.6 points on Sept. 27, the DXY is trading at 110.9 points and may show signs of reversing. The U.S. dollar’s continued strength throughout the year has primarily been adversarial towards stocks, cryptocurrencies, and foreign currencies such as the euro, the British pound, and the Japanese yen. It may now be slowing down after the Federal Reserve showed signs of possibly slowing down the pace of its interest rate hikes soon.
Nevertheless, macro conditions are not the only thing propelling Ethereum forward. Open Interest in ETH also surged dramatically in the last few hours. According to crypto research platform Delphi Digital, almost $500 million in ETH perpetual futures contracts were bought on Coinbase (NASDAQ:COIN) in under an hour, which immediately led prices to pump from $1,350 to $1,380.
Finally, ETH may be benefiting from a reduction in its total supply. Even after it transitioned to Proof-of-Stake, Ethereum’s ETH emissions kept surging, with data from ultrasound.monOct. 8g that by October 8, ETH’s total supply had increased by 13,086 tokens in 23 days. However, heightened on-chain activity has led to the blockchain’s monetary policy becoming deflationary, and ETH’s total supply is now close to whaSept. Fifteen be on September 15.