Ethereum price forecast for February, including Morgan Stanley comments

Ethereum (ETH) price forecast for February, including Morgan Stanley comments

By Investing.com Staff 

Ethereum (ETH) price had a very strong performance in January, gaining nearly 33% to record its best month in July 2022. The entire cryptocurrency market has managed to stage a minor relief rally after a big slump in 2022.

The total crypto market cap soared from the 2-year lows just below $750 billion to hit $1 trillion in mid-January. The index is now trading above the 200 weekly moving average, which has managed to provide support since the breakout occurred a few weeks ago.

Markets have been in a risk-on environment in recent weeks as more and more investors bet on a Fed pivot. Ethereum price trades nearly 4% lower since the start of the week as some crypto investors opted to take profits ahead of the much anticipated Fed meeting later today.

A reiteration of an ultra-hawkish message from the FOMC and Fed's Chair Powell is likely to create more selling pressure for risky assets, including cryptocurrencies.

"There is a strong possibility that in the press conference Powell will be more hawkish and retighten financial conditions. For that reason, we could see a healthy short-term correction in crypto and all risk assets," said Nauman Sheikh, head of treasury at crypto asset management firm Wave Financial, according to CoinDesk.

Ethereum price forecast for February

The rally has also helped the world’s second-largest digital asset to break out of the triangle, which offered resistance at around $1,400.

Ethereum price is now approaching another key resistance - the bull/bear line that sits around $1,700. This proved to be a major technical level in the past as it managed to act as support for 12 months between May 2021 and May 2022. The bears had five consecutive attempts rejected to break below this level in this time period.

A brief trip above $1,700 in August proved to be a failed breakout, facilitating a sharp accelerated move to the downside.

Looking forward, the price action could settle between $1,400 - the 200 weekly moving average - and $1,700 - the key resistance near current levels. The zone around $1,420 is also important as it represents the former all-time high for digital asset.

What are analysts saying?

Morgan Stanley analysts weighed in on Ethereum's recent outperformance. Morgan Stanley's ETH price speculation indicator (PAVA) is now at extreme highs.

"When PAVA hits an extreme high level it suggests that market speculators have been accumulating ETH long positions at a faster pace than the underlying network blockchain activity," the analysts wrote in a client note.

"In recent days (Jan 29th) ETH PAVA hit the highest level ever, even higher than the level reached in April 2022. ETH has fallen 8/9 times following a similar signal in the following one month and three months, while ETH/BTC has fallen 7/9 times in the following three months."

PAVA has been on the rise in the last 3 months, first because of descending transaction volumes and then due to higher Ethereum prices.