Ethereum briefly touched $1,500 today as it broke out of the tight range it had been trading within since mid-September.
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 in a range between approximately $1,405 and $1,240 for more than a month now. 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 September 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 September 27, the DXY is now trading at 110.9 points and may be showing signs of reversing. The U.S. dollar’s continued strength throughout the year has largely 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 for 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 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.money showing 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 what it used to be on September 15.
Disclaimer: At the time of writing, the author of this piece owned BTC, ETH, and several other crypto assets.
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