Ether Rises as Bitcoin Falls

Ethereum surges as Bitcoin consolidates—here's what's happening in the overall crypto market.

ETH All Time High!

The price of Ether reached all time highs north of $2,600 this week. Ethereum is surging as Bitcoin remains in consolidation mode.

Just one week ago, Ethereum broke through the $2,500 price level before retracing along with Bitcoin and the overall crypto market. We saw a big run up across the board ahead of the Coinbase listing. The market appeared to have baked in the COIN momentum prior to the listing. BTC and ETH, among others, saw natural corrections following the sharp spikes early last week.

Now, ETH is on the move again.

Currently the direction it’s moving is up… but that could change at any moment. As of writing, Bitcoin is testing levels closer to $50,000. We’ll get into what that could mean for ETH and the rest of the market later on.

Bullish Calls

Is the real alt season up next?

Bitcoin has provided momentum for the overall crypto market this past year. We’ve seen a number of altcoins like ADA, XRP, UNI, DOT, …DOGE, and really most others rise to new all time highs or prices we haven’t seen in years for some older coins. Alt season may just be getting started though.

With ETH jumping in price, it could usher in a next level move for altcoins during this current market cycle. What will be interesting to watch is whether or not ETH can continue to gain as BTC trades sideways or even down.

Real Vision CEO Raoul Pal is bullish on ETH.

"When you price anything up in DeFi, NFT, community tokens or even metaverse worlds, everything is basically priced in ETH, including designers time etc. ETH is rapidly becoming the currency of the digital world and BTC is the pristine collateral and base layer.”

I’m a bit biased toward Ethereum because I do mine Ethereum and bought in years ago when the price was just $12/ETH… I’ve said it before—Ethereum is responsible for a large portion of my overall cryptocurrency portfolio. I am, however, attempting to overcome my personal bias toward ETH as I strive to lean even heavier BTC.

While I am readjusting my portfolio over time, I previously mentioned that my crypto portfolio is roughly 70/20 BTC/ETH (the remaining ~10% being small investments or crypto mining plays) so I’m not complaining about the current price action. Veteran trader Peter Brandt also chimed in on Pal’s positive comments about the surging price of ETH saying that he feels the same way.

Bitcoin Dominance

Bitcoin dominance is falling.

Bitcoin dominance is falling BUT the world’s largest cryptocurrency by market cap is far and away ahead of Ethereum. For the first time since 2018, Bitcoin’s share of the overall crypto market fell just below 50%. It’s hanging right around that 50% level. The Ethereum price action is critical moving forward.

Ethereum is near $300 billion in market cap.

Bitcoin has pulled back to the $1 trillion mark.

The next few weeks will be key in determining the path forward for both of these top cryptocurrencies. Still though, I have to reiterate that as bitcoin moves, so does the market. I’m not confident Ethereum can truly breakout on its own. Although Ethereum and the majority of the altcoin market have been riding high, all of that could change if Bitcoin turns bearish.

We could also see a large swath of profit taking from Ethereum if the price spikes toward unprecedented levels like $3,000. Such profit taking could see money flow from ETH to BTC or into stablecoins while investors wait and see what the market does. Q3/Q4 of this year will tell us whether or not we’re entering an extended bull run spurred on by a Bitcoin Supercycle.

Personally, I’m keeping a close eye on the price of Ethereum right now. Because I’m looking to increase the percentage of my BTC holdings, another large move up by ETH will have me considering converting some ETH to BTC. For now, I’m still mining Ethereum, keeping any non-mined positions of my portfolio as is, and waiting to see what happens.

Bitcoin Whales vs $50k

Bitcoin whales could tip the market.

The closest downward Bitcoin price target (to where we are right now) is $50,000. I mentioned this last week. We haven’t quite tested that level yet but we are getting dangerously close. There is a “whale cluster” in the high $40,000s up to to about $50,000 currently providing support.

What these whales do next could tip the market either up or down. If profit taking increases, look for that next $44,000 price point that I previously mentioned. A bearish break through the $50,000 level would put the low-mid $40,000s in play and set us up for a real test.

All that said, I remain bullish—long term.

That goes for both Bitcoin and Ethereum.

Even if we are entering the second half of the current market cycle, there is still a lot of room to run. Last newsletter, I mentioned the heavy swings up and down that we witnessed in 2017-2018 on the road to $20,000. Volatility comes with the territory and that won’t change this time around.

Whales could tip the market, but crypto newcomers could also tip us off. Keep an eye on what new retail buyers do in the coming weeks. Flows on exchanges will be critical in determining what direction we’re heading. There was a large amount of buying the dip last week after the correction from BTC all time highs above $64,000.

Now, we either need to see if there’s panic selling or increased buying during a dip below $50,000 OR FOMO buying on the next shot at the all time high. Coinbase and other crypto mainstreaming is helping onboard newcomers to the space but what those newcomers do in the face of their first real price action will reveal the true colors around market sentiment.

Whales and newcomers—watch those two groups.

Side note—I also wouldn’t put it past Michael Saylor and MicroStrategy to buy around current levels and continue adding during dips. AND, a drop below $50,000 may just be the excuse newer institutions need to get into Bitcoin.

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$52,137.68—BTC Today

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