Ethereum price prediction: a bearish divergence pattern emerges
- Ethereum has outperformed Bitcoin in the past few weeks.
- The coin has jumped because of the recent London hard fork and DeFi performance.
- It has formed a bearish divergence pattern.
The Ethereum (ETH/USD) pulled back on Monday as some investors took profit. The altcoin declined to $3,230, which was slightly below the weekend high of $3,340. It has a market capitalisation of more than $377 billion and is the second-biggest cryptocurrency in the world after Bitcoin.
Ethereum helped by upgrade and DeFi
Ethereum has had a strong bounce recently. The coin’s price has almost doubled in the past few weeks after it fell to $1,700. In total, Ethereum has risen by almost 90% from its lowest level in July.
There are several catalysts that have pushed Ethereum’s price to the recent levels. First, Bitcoin has also rallied by more than $16,000 in the past three weeks. In most cases, the price of Ethereum and other cryptocurrencies tend to follow that of Bitcoin.
Second, Ethereum has been helped by the happenings in the Decentralized Finance (DeFi) industry. In the past few weeks, the total value locked (TVL) in the DeFi ecosystem has jumped to more than $88 billion.
This is a remarkable jump considering that the ecosystem saw its value dip to less than $50 billion during the crypto sell-off. Aave now has a TVL of more than $15.7 billion while Curve Finance and InstaDapp have a TVL of more than $1o billion.
In total, 17 of the biggest DeFi projects have a TVL of more than $1 billion. This is important for Ethereum since most of these projects are built using its technology.
The next key catalyst for Ethereum price is the recent London hard fork or software update. The update saw developers implement some key information for the ecosystem. The most notable is the burn feature, which will see millions of Ethers destroyed.
Ethereum price prediction
The four-hour chart shows that the ETH price has been in a tight range recently. Along the way, it has formed an ascending channel that is shown in black. It has also risen above the 25-day and 50-day exponential moving averages.
At the same time, oscillators like the MACD and the Relative Strength Index (RSI) have formed a bearish divergence pattern.
Therefore, there is a likelihood that the coin will bounce back lower as investors start taking profit. If this happens, the next key level to watch will be $3,000.