The closing prices of ETH in the past week (16th to 22nd January) indicate that ETH prices were on the uptrend till 19th January. Thereafter, ETH prices started showing a downtrend with the closing price of 22nd January ($1166.24) being the lowest. The week’s high was $1439.33 (19th January) and the week’s low was $1044.22 (22nd January). Signals this Week The price pullback since Wednesday can be largely attributed to the transition of power in the U.S., as per some experts. It also indicates that many investors are expecting an intensified regulation of the cryptocurrency markets by the Biden administration. Thus, a lot of selling pressure was exerted in the cryptocurrency markets. In other words, a price decline also indicates that sellers are dominating the crypto market in the past couple of days. The high prices reached on Tuesday could also have acted as a ‘sell’ signal for some of the existing ETH holders, apart from fear of intense regulation. ETH prices have declined by 21.84% this week. While experts view ETH price on the recovery path, it is expected to struggle near the $1200-$1250 mark. The hourly chart of ETH/USD shows a downturn around the $1300 mark. Source: Trading View The price shows signs of recovering as it has picked up from the day’s low of $1044.22, but its decline below the $1200 support level since 21st January is worrisome. As of 22nd January, it broke the support level of $1050. However, ETH price showed a positive sign by breaking the resistance level of $1150 towards the end of the day. So, it is slowly recouping. Reasons for ETH Price Movement Moreover, this week the Decentralized Finance (Defi) sector registered a TVL (Total Value Locked) of $25 billion. The Defi boom is largely responsible for the surge in ETH prices in 2021. With the Defi boom continuing, we can be assured that ETH prices will rise in 2021. Current fluctuations in ETH prices are just a part of the market price correction process. The launch of Ethereum 2.0 will further ensure a rise in ETH prices in 2021. ETH 2.0 has reduced transaction costs on Defi trading platforms. Problem-solving is accelerated as transactions are validated by a new system known as “proof-of-stake.” This distinct feature has given Ethereum the first-mover advantage over Bitcoin. Thus, this bearish trend is just a temporary phase.
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