- Ethereum (ETH-USD) is the king of crypto transactions.
- Demand will be strong for years.
- ETH-USD has a clear path for bigger success.
Although cryptocurrency is not directly part of the equity indices, the sector trades alongside stocks now. Case in point, Ethereum’s (ETH-USD) chart closely resembles that of the S&P 500 of late. Specifically on January, comments from St. Louis Federal Reserve President James Bullard rocked stocks into a flash correction. The jolt was also clearly visible on the ETH-USD stock chart, and just as sharp. The same scenario repeated exactly a month later after the Russian invasion of Ukraine dominated headlines. So, for trading purposes, Ethereum now has benchmarks that the bulls can use. In addition to the long term bullish arguments, we have short term guiding lines.
But first we should make the case for the fundamental need for owning Ethereum. Cryptocurrency is here to stay because all money will eventually go digital. This is a matter of when not if because everything else is already there or on its way too. The case for ETH specifically is because it is the dominant cryptocurrency transaction pipeline. A good chunk of all crypto transactions now pass through the Ethereum network.
It has competitors like Cardano (ADA-USD) and Solana (SOL-USD), but they have a ways to go to catch up. Since it is not a monopoly, it may lose a bit of market share. However the value of its supporting token should remain relevant. Also and since we have more skeptics than believers, demand can only grow. The naysayers will have to follow later, so there will be enough business for all of the competitors to thrive.
| ETH-USD | Ethereum | $3,152.49 |
Ethereum Chart Lines to Know
Click to Enlarge
Now let’s infuse a bit of a chart knowledge to lay out the short-term path for the price action. Ethereum now has a series of higher-lows coming out of those two sharp corrections we noted. That’s good news, because it gives the bulls momentum and they will need it.
Looking above at $3,575 ETH-USD has a potential problem waiting. That’s the place from where it collapsed on Jan. 5. And it has since failed to recover, so it becomes forward resistance. If the bulls are able to continue this momentum, they could have enough oomph this time to burst through.
My alert there suggests Ethereum could then target $4,000 then $4,500. In fact the technical target is also forecasting new highs. My overall thesis on the crypto price action has been unfolding according to plan since last year.
I use the Bitcoin (BTC-USD) path to make my decisions in all my cryptocurrency investments. Last year I deployed a three stage accumulation effort of three coins. I designed it to have three stages and I’ve already deployed one. Ethereum is part of of my plan, the other two are ADA and SOL.
My next purchase would come if Bitcoin loses its January low. The consequence of that would bring $25,000 into view. If it doesn’t, then so be it because I’m already long. The rebound brought us a 40% rally already.
The Big Dip
There is a good argument to support the need for Bitcoin to revisit $20,000 this year. Yesterday while I was debating this with my trading group, a friend took issue to this comment. So, I know it’s angered a few of today’s readers here. However I assure you it comes from a bullish perspective. You may have already noticed that my tone suggests I am a bull not a bear. My goal is to seek the best average entry price possible over time.
Crypto will provide profits for those who consistently invest in it. I am also realistic that I won’t nail perfect purchases, so I spread them across many. This concept of investing, like with gold, has been around forever for a reason. For decades we have seen the benefits of nibbling over time. Ethereum has already succeeded in becoming relevant, and it would take a disaster to unwind that. The competition will only drive it to be better than it already does.
On the date of publication, Nicolas Chahine held ETH, USDC, SOL, CRO. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
