Ethereum rallied again on Thursday, initially pulling back a hair before promptly turning around and moving to a new local high, reaching the $1,300 level. This is a bullish candle that displays Ethereum's volatility throughout the day, trading in more than a 12% range intraday. That being said, rising volatility usually precedes some turbulence or bearishness, which hints at a possible local top in the near future.
(January 7, 2020 8:30 PM EST)
Ethereum is closing in on its January 2018 ATH, now less than $200 away. This comes as BTC rallies to double its ATH, further suppressing the ETH/BTC ratio down a bit from 0.033 to 0.03 now. Bitcoin should continue to suck up most of the crypto market during the meat of this crypto bull market, however ETH should be firmly in second and be the first asset benefit from profit-taking as money rotates into other assets.
I'm looking for a local
In traditional investing, the CME is launching Ethereum futures trading in February which will enable more institutional liquidity and additional access to Ethereum that is currently on available through Grayscale's ETH Fund (which was recently paused due to excessive demand) and the new QETH.U fund on the Toronto Stock Exchange. Institutions don't typically use retail-facing exchanges such as Coinbase or Kraken (perhaps institutional-grade custodying or OTC trading) but are subject to additional legal and compliance regulations.
ETH is now only a few hundred dollars short of its January 2018 ATH of $1,400, which is a pretty arbitrary ATH and price level. Accordingly, I think it's only a matter of time (not much) before ETH slices through that level and springs up to $2,000 and above.
I think the best strategy here is to buy the dips and even earn ETH wherever possible. Otherwise, DCA is the way to go and possibly store some dry powder for another 'larger' dip if we're lucky enough to get one in Q1 2021. I think 2021 will be substantially better for 2021, although ETH has outperformed BTC in 2020 so really it's no surprise there.
Support: Look for local support around $1,000, which is untested but as ETH continues to exhibit bullishness and prints higher highs, higher lows will likely follow. More importantly, however, I think now is the time to watch the ETH/BTC ratio for support instead of the USD pairing. The USD pairing is not the sole factor in terms of support and resistance; in fact, 0.03 could be a critical support level which may equate to an arbitrary US Dollar price level. Below $1,000, I think ETH should find support at the 38.2% fib level around $900 or the 50% fib around $800, which should be a strong support level.
Resistance: If ETH can hold onto $1,000 and grind higher, ETH should continue higher and then we can start talking about new ATH's, as I doubt there's much resistance between $1,000 and $1,400. $1,400, the ATH, is my immediate target and resistance point that ETH needs to break above. Otherwise, I think ETH could get rejected and pull back a bit.
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