Ethereum buyers are solid at press time. After breaking out from December highs and $1.35k, the coin has added roughly 20 percent.
The upswing is with rising trading volumes, a signal for confidence and trader participation.
There could be more entries for buyers to load the dips in smaller time frames to target $1.7k in the short term. It is especially the case if buyers retain the current momentum.
As long as ETH is above $1.5k, the uptrend will be valid even if there are inevitable corrections. Subsequently, there could be solid grounds for ETH bulls to reverse the deep losses of early November.
Dropping Inflation after Merge
The swing in ETH is linked to favorable macroeconomic factors, especially in the U.S. Central banks are beginning to wind up their monetary policies as inflation drops.
Regarding inflation, Ethereum’s has been dropping in the past few months. After the successful Merge, which saw Ethereum shift to a staking system instead of proof-of-work, the network dispensed fewer coins to validators.
Trackers show that Ethereum has distributed 250 ETH in the last five months. If the network were running on proof-of-work, it would have seen 1,439,450 ETH move to miners.
This is besides the number of ETH in the official Beacon Chain deposit address worth over $25.2 billion at spot rates. Even though these could be unlocked in the next few weeks, ETH’s dropping inflation is bullish.
Ethereum Price Analysis
Buyers are buoyant, and the coin is floating higher as momentum rises. Notably, ETH prices broke above two levels of resistance: $1.35k and the multi-month resistance trend line.
Therefore, since ETH is up 18 percent from December highs and bars are along the upper BB, traders can look for entries to buy on dips, riding the surging upswing. The immediate support line could be $1.45k, flashing with the bull bar of January 14.
As long as prices are above this line, bulls are in control. Buyers can target $1.7k, or November highs, as their immediate take profit zone should prices continue to rise.
Technically, ETH bulls must close above $1.7k to wind off the bears of November. Accordingly, this could unlock demand as the coin officially turns around after losses in 2022.
Technical charts courtesy of Trading View
Disclaimer: Opinions expressed are not investment advice. Do your research.