Ethereum price may be on the cusp of a major bullish breakout as sentiment in the industry improves. The coin is trading at $2,340, which is about 40% above the important support at $1,700. It is also about 40% below its all-time high of more than $4,000. Let us look at how I expect Ether to trade in August.
Ether found support at $1,700
As I will explain below, looking at the daily chart shows that Ethereum price found a strong support at around $1,700 in May, June, and July. This price action is similar to that of Bitcoin, which found a strong support at around $29,000.
Ethereum price has rallied for several reasons recently. In my view, the key driver is the upcoming London hard fork that will lower the amount of Ethers in circulation by about a third. It will also introduce a burning feature, which will also lead to lower supplies.
At the same time, the network is gearing towards Ethereum 2.0, which will change how Ethers are minted. Precisely, it will move the process from a proof-of-work (PoW) to a proof-of-stake (PoS). The PoS consensus is usually better than PoW because of its energy efficiency and speed.
Meanwhile, Ethereum price has also risen because of the strong activity in the Decentralized Finance (DeFi) industry. The total value locked of most DeFi platforms like Aave and Maker has surged recently. The TVL now stands at more than $67 billion, meaning that it has risen by almost $20 billion in the past month. This is an important concept because Ethereum is the developer platform of choice for DeFi platforms.
Further, Ether prices have risen because of the relatively dovish stance by the Federal Reserve and the fact that the 10-year yield has dropped to the lowest level this year. Also, on-chain data shows that activity in the DeFi ecosystem has been rising.
Ethereum price forecast
Now, turning to the daily chart, we see several important things. First, we see that Ethereum price struggled moving below the support at $1,700 in the past three months. This makes it a key level of support.
Second, when we bring in moving averages into the picture, we see that the coin has moved above the 50-day and 200-day EMA.
Moving on, we also see that Ether has moved above the falling trendline shown in blue. This is a notable trendline since it connects the highest points from June. By so doing, the coin has invalidated the descending triangle pattern.
Therefore, with the volume situation improving, I suspect that the coin will maintain the bullish trend in August. If this happens, the next key level to watch will be the psychological level of $3,000.