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Ethereum (ETH) Price Breaks Out to 20-Month High; Sponge V2 Unleashes Meme Coin Mania
Ethereum (ETH) has started 2024 with a bang, breaking out above $2,400 for the first time since May 2022. At the time of writing on January 2nd, ETH is trading at $2,425 – up over 5% in the last 24 hours. Bitcoin has also rallied over 7% to trade above $45,500.
According to crypto analyst Sypool’s recent TradingView analysis, Ethereum’s price action is closely tied to Bitcoin’s current bull run:
“As the window period of the BTC ETF approaches, the fluctuations of the market gradually amplify. The current options open interest in BTC is at an all-time high, approaching $20 billion. On Deribit, among the options with expiration dates on January 5 and January 12, the number of call options is clearly leading…”
Sypool goes on to explain how the options market data indicates a high probability of SEC approval for a Bitcoin ETF in the coming days. The shrinking GBTC premium and reducing GBTC holdings by Ark Investment also signal growing confidence in an imminent BTC ETF.
Sypool believes these market signals point to Bitcoin potentially reaching $50,000 in the short-term. And as a closely correlated asset, any surge in Bitcoin would likely drag Ethereum to new local highs.
On the ETH/USD daily chart, Sypool notes the Moving Average Extension (ME) indicator remains firmly bullish. However, he points out that Ethereum whales did not provide much buying support during the last push above $2,400.
Looking at the 4-hour timeframe, Sypool says that although the bullish ME reading holds, yesterday’s rally occurred without a blue volume column. This suggests weaker momentum that could limit further upside around current levels.
In summary, Sypool believes Ethereum remains in a bullish trend but may struggle to break out above $2,500 in the coming days. He sees ETH next upside capped around $2,500 if Bitcoin makes a run towards $50k on ETF approval rumors.
A Retest of Breakout Levels Seems Likely
Analyzing the ETH/USD chart, we can see the breakout cleanly cleared the psychological $2,400 mark with reasonably high trading volumes. However, the last 10 hours have yielded a retracement back down to retest this area as support.
On the daily time frame, Ethereum’s relative strength index (RSI) recently cooled to print a reading of 55. This puts ETH in neutral territory after an overbought spike above 70 during the initial breakout move.
An RSI level of 55 signals buyer momentum has stalled out slightly near-term, allowing for bulls to take profit and consolidate around the $2,400 mark. However, the mildly oversold conditions also open the door for renewed upside once shorter-term profit-taking completes. Unless the daily RSI breaks back below 50, the path of least resistance remains to the upside for Ethereum.
Upside Targets
If ETH bulls can establish the previous $2,400 resistance zone as new support, a move to test the psychologically-important $2,500 mark seems likely.
Stretch targets lie at $2,600 – another level not seen since May 2022. However, as Sypool noted, substantial ETH gains above this seem unlikely without a surge in Bitcoin first since Ethereum still acts as a Bitcoin’s “follower”.
Sponge V2 Launch Drives Renewed Hype
The meme coin Sponge (SPONGE) has seen over $1.5 million worth of its tokens staked just over one week after announcing an upgraded V2 version.
Sponge models itself after the popular SpongeBob SquarePants cartoon, featuring related memes and themes. As a zero-tax token hosted on Ethereum, it allows frictionless transfers between holders.
The impressive staking numbers come on the back of the Sponge V2 announcement last week. The new token iteration will introduce a play-to-earn (P2E) racing game, allowing gamers to earn additional SPONGEV2 tokens for active participation.
SPONGE holders can currently stake their tokens to earn 575% APY yields paid out in the new SPONGEV2 token. For non-holders, the Sponge website also offers a fiat on-ramp widget to purchase and automatically stake SPONGE.
These attractive staking incentives and P2E integration have refueled hype for the formerly fading Sponge ecosystem after its brief success in early 2023.
Sponge V2 remains unavailable for public trading at this time. The only access is by staking and locking the original V1 token via the staking dApp. Once the initial buy and stake phase concludes, open trading will commence.
In the interim period, stakers can benefit from additional variable yield on their locked tokens. If enthusiasm mirrors the original meme coin launch, substantial price gains could arrive once SPONGEV2 is freely tradable later this quarter.
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