Ethereum price records increased by 9%, traders are betting on more profits

As the general sentiment in the market is improving, the price of Ethereum has been rising for the past week. The second crypto could extend its gains in market capitalization if macroeconomic conditions continue to support its rally.

As of this writing, Ethereum price is trading at $1,333 with sideways movement in the last 24 hours. The cryptocurrency has gained 10% in the past week and stands as one of the top 10 performers by market capitalization.

ETH price moves higher on the 4-hour chart. Source: ETHUSDT Trading View

The price of Ethereum follows market sentiment

As a Report Market sentiment improved based on widespread reports of an economic downturn from Blofin, an analytics firm. These prospects for worse financial data could force the US Federal Reserve (Fed) to loosen its monetary policy.

The financial institution is raising interest rates to control the highest inflation in decades. As a result, the global market is being affected. If conditions deteriorate too much, the market believes the Fed will back off, allowing Ethereum and other risky assets to rally.

Today, the federation sheds more light on the next steps; If the momentum slows down, the Ethereum price may continue in its bullish direction. Positive expectations are flowing into other crypto financial sectors.

According to Blofin, there are positive developments in the futures and alternative sectors. The firm noted the change in outlook for Q1, 2023, compared to Q4, 2022:

Expectations are also ongoing. In the futures market, the positive base term structure has been maintained for some time. Although the futures base is still flat, investors’ clear expectations are not as pessimistic as they were in 2022q4.

Ethereum Price ETH ETHUSD Chart 2
Source: Bluefin

To see more volatility of the Crypto market

The decline of the US dollar supports the strong growth of the Ethereum price. As measured by the DXY Index (DXY), the currency is retesting critical support that allows ETH and other risk assets to appreciate.

However, the decline in DXY indicates an increase in volatility in the crypto market. As Bluefin says:

It should be noted that forward-month BTC options have slightly increased implied volatility. As the December CPI data is about to be released, the play between investors in the space and volatile markets is likely to further increase implied volatility.

Implied volatility measures the future movement of an asset. The analyst firm believes short-term metrics are pointing up, but the medium-to-long term still shows a “relatively bearish outlook.”

Options traders are accumulating calls (long positions) for BTC with an expiration date set for January 27. The strike price of these contracts is $18,000 and $19,000. In other words, crypto traders are betting on BTC (and therefore the price of Ethereum) to go much higher than today’s levels by the end of the month.

Leave a Comment