The king of altcoins has shared a close correlation with Bitcoin since forever. Needless to say, every move made by the king coin has had some impact on Ethereum. That dynamic is beginning to change, however, and this might bear a good result for the second-generation cryptocurrency and its investors.
Ethereum rises beyond Bitcoin
Over the last couple of weeks, the crypto-market has fluctuated between bullish and bearish. Although on a macro time frame, Ethereum has gained significantly, recovering all the losses noted by it in June.
In light of improving market conditions, ETH has also improved its standing and was trading at $1,721 at press time. After its recent 8.1% rally, the altcoin neared a critical zone. This would set Ethereum up for a rally until the arrival of the Merge on 19 September.
Ethereum price action | Source: TradingView – AMBCrypto
The Fibonacci Retracement from its all-time high of $4,811 to the lows of $880 has brought forward critical zones for Ethereum, and the altcoin is close to one of them. The 23.6% Fib level, which acts as a solid base/support for any rally, coincided. In fact, at a price level of $1,807, ETH seemed very close to breaching it and flipping it into support.
The reason behind this uptick is twofold. The first is a lack of activity from investors as ETH holders have been HODLing for over a month now. The rate at which the token changes hands has been declining, which is good since conducting transactions in such a volatile environment would inevitably lead to losses.
Ethereum velocity | Source: Santiment – AMBCrypto
Since that didn’t happen, ETH managed to recover on the charts. The evidence of the same can be found in the gas fees of the network as well.
The lack of circulation last week led to lower costs which are expected to rise once the Merge’s FOMO kicks in.
Ethereum has noted a fees decline | Source: Santiment – AMBCrypto
The second reason is the Merge itself, which is bound to bring a tectonic shift to the second biggest crypto-network. As the date of the update gets closer, the hype is rising as well, which is why Ethereum’s growth is surpassing that of Bitcoin.
At ETH’s press time price last year, BTC was valued at $41k. Today, it is struggling to cross $24k. Ergo, if ETH does decouple from BTC, it will be in a much better position.
