The king of altcoins has shared a close correlation with Bitcoin ever since. Needless to say, every move of the king coin has had some impact on Ethereum. However, those dynamics are starting to change and this could be a good outcome for the second-generation cryptocurrency and its investors.
Ethereum rises further than Bitcoin
Over the past few weeks, the crypto market has fluctuated between bullish and bearish. Although on a macro timeframe, Ethereum has made significant gains and made up for all the losses it noted in June.
In the face of improving market conditions, ETH has also improved its reputation, trading at $1,721 at the time of writing. After the recent 8.1% rally, the altcoin has approached a critical zone. This would set Ethereum ready for a rally until the arrival of the Merge on September 19.
Ethereum price action | Source: TradingView – AMBCrypto
The Fibonacci Retracement from its all-time high of $4,811 to the low of $880 has highlighted critical zones for Ethereum, and the altcoin is close to one of them. The 23.6% Fib level, which acts as a solid foundation/support for any rally, coincided. In fact, with a price level of $1,807, ETH looked very close to breaking it and turning into support.
The reason behind this increase is twofold. The first is a lack of investor activity as ETH holders have been HODLing for over a month now. The rate at which the token changes hands has slowed down, which is a good thing, as executing trades in such a volatile environment would inevitably lead to losses.
Ethereum Speed | Source: Santiment – AMBCrypto
Because that didn’t happen, ETH managed to recover from the charts. Evidence of this can also be found in the network’s gas tariffs.
The lack of circulation last week led to lower costs that are expected to rise once the Merge’s FOMO kicks off.
Ethereum has noticed a drop in costs | Source: Santiment – AMBCrypto
The second reason is the Merge itself, which will undoubtedly bring a tectonic shift to the second largest crypto network. As the update date gets closer, so does the hype, which is why Ethereum’s growth is outpacing Bitcoin.
At the price of ETH last year, BTC was valued at $41k. Today it struggles to cross $24k. Ergo, if ETH decouples from BTC, it will be in a much better position.