NewsBTC technical analyst and editorial executive Tony “The Bull” now believes that ethereum (eth), the second most valuable cryptocurrency, is about to explode. “The Bull” cites the formation of technical candles on the ETHUSDT daily chart as a leading indicator for eth, a coin that is now trading above $3,000, the highest level in two years.
the analyst pointed to Bollinger Bands (BB), a technical indicator used to measure volatility. Although the BB is a lagging indicator, like most technical indicators, including the moving average, traders associate it with a decrease in volatility whenever its band narrows.
As history shows, this “contraction” often precedes key breakout levels (in either direction) that can determine price developments in the coming sessions. However, this changes every time gangs begin to expand. Typically, when this happens, the prices of the assets, in this case eth, are likely to rise.
If we look at the monthly chart of ETHUSDT, the prices have increased. Despite the general optimism in the crypto markets, eth prices have remained within a tight range in recent weeks. As a result, what is evident on the monthly chart is a brief period of price consolidation resulting in a “contraction.”
As eth rises, things are starting to look up for the second most valuable coin. Trading above $3,000, trending towards April 2022 levels. Notably, the coin is within a breakout formation since prices resoundingly surpassed the January 2024 highs in February.
Optimism for further price gains arises from the development of the monthly chart. As the bands begin to widen and the monthly bullish bars cluster along the upper BB, this suggests high volatility. Technically, as long as the bars converge along the upper BB, as is the case, it means that the bullish momentum is strong. As such, based on this formation, the executive believes that what is happening on the ETHUSDT monthly chart could be a precursor to an “explosion.”
Eyes on the United States SEC
What could fuel the rally further, possibly pushing the coin above $3,500, is how the United States Securities and Exchange Commission (SEC) responds to current applications for ethereum exchange-traded funds (ETFs). . The approval of an ethereum spot ETF could lead to greater institutional investment in ethereum.
As seen by how institutions have reacted to spotting bitcoin ETFs, a similar product for ethereum would see billions being funneled into the currency. Greater institutional investment could potentially drive eth prices higher.
As Reddit prepares to go public, its filing with the US SEC shows that the social media platform plans to accumulate bitcoin (btc), ethereum (eth) and Polygon (MATIC) using excess cash.
Featured image from Canva, TradingView chart
