Ethereum Price Sees 20% Daily Spike, Highest Increase Since 2021 — Is $4,000 ETH Within Reach?
What's Behind Ethereum's Massive Daily Increase? | Credit: Derek Fenech
Key Takeaways
- Ethereum broke out from a descending resistance trend line on May 20.
- There are rumors the Securities and Exchange Commission (SEC) will approve the Ethereum ETF.
- Why is there a sudden optimism in approving Ethereum ETF’s and how will this affect the price?
On May 21, 2024, the ETH price increased by 20%, reaching a high of $3,690. This was the highest daily increase since May 24 2021, when ETH increased from $2,100 to $2,650. The increase caused a breakout from an important resistance.
Fueling this rally are the positive rumors regarding the SEC’s decision on the approval of an Ethereum ETF, the deadline for which is on May 23. Taking this into consideration, there is a strong possibility that Ethereum has completed its two-month correction and will increase toward a new yearly, and possibly all-time high.
Ethereum Posts Highest Daily Increase in Three Years
The Ethereum price had fallen under a descending resistance trend line since its yearly high of $4,091 on March 12. The trend line caused three rejections, on March 13, April 8 and May 18, respectively (red icons).
Then, on May 20, ETH created a massive bullish engulfing candlestick and broke out from the descending resistance trend line.
The breakout was preceded by a bullish divergence that developed for over a month in both the RSI and MACD (green). These divergences often lead to bullish trend reversals, as was the case with ETH.
The Ethereum price moved above the 0.618 Fibonacci and horizontal resistance at $3,613 today (May 21). Maintaining this breakout will confirm the correction is over, leading to a new yearly high.
Positive Ethereum ETF News Caused the Increase?
The ETH price increase coincided with a notable surge in the approval chances of an Ethereum ETF on May 23. Yesterday, the chances of an approval increased from less than 25% to over 60%. The final deadline for the VanEck ETF is on May 23, while the ARK 21 Shares ETF deadline is the next day.
The jump in approval chances happened after the SEC asked exchanges to update their filings for the ETF. This often happens before exchanges list new trading products.
However, the SEC has not given a verdict on the registration statements, which allow for these products to be legally sold to investors. According to ETF analyst Nate Geraci , the SEC has to approve both the exchange rule changes and registration statements to launch the ETFs.
Ethereum Price Prediction: All-Time High Within Reach?
The weekly time frame Ethereum chart shows the price is in wave three of a five-wave upward movement. The sub-wave count is in black, indicating ETH has started the fifth and final sub-wave. The most likely target for the top of the movement is between $4,700 – $4,870.
Two ratios create this target. Firstly, the 1.61 external Fibonacci retracement of sub-wave four gives the $4,867 upper limit. Secondly, giving sub-wave five 0.618 times the length of sub-waves one and three gives the lower limit of $4,700. The ETH price all-time high is at $4,868, so it is unclear if this target will present a new high.
If sub-wave five extends, it could reach a high up to $5,863, giving it the same length as sub-waves one and three combined.
The structure of sub-wave four aligns with this prediction. Sub-wave four shows a completed A-B-C correction (white), where wave C developed into an ending diagonal. On top of this, the sub-wave count (black) shows truncation, meaning that bears did not have enough strength to push the price to new lows.
Rather, sub-wave five finished above the lows of sub-wave three. Truncations often lead to a violent movement in the other direction, as was the case for Ethereum, which has likely begun a new five-wave upward movement (yellow).
Despite the bullish price action and wave count, falling below the new wave one high (red) at $3,144 will invalidate the count and deepen the Ethereum price correction. As it stands, there are no signs suggesting this will be the most likely possibility.
New Yearly Highs on the Horizon
The price action, indicator readings, wave count and news have all aligned positively, leading to the biggest Ethereum daily increase in more than three years. The readings suggest the rally is likely to continue at least until a new yearly high, and possibly until a new all-time high price.
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