Analysis: 3 reasons why Ethereum price surges towards $600

Aside from the high anticipation for Ethereum 2.0, a breakout above high timeframes and daily gas usage remain key positives.

Ethereum 2.0 brings upward momentum to prices

When the amount of ETH staked in the Ethereum 2.0 deposit contract address reaches 524,288, the Ethereum 2.0 mainnet will be launched.

According to data from CryptoQuant, the value of ETH staked in the Ethereum 2.0 deposit contract address is correlated with the price.

Ratio of ETH price to total value of staked ETH Source: CryptoQuant

CryptoQuant CEO Ki Young Ju noted that this correlation appears to be increasing as the launch date of Ethereum 2.0 approaches. He wrote:

“As the launch date of Ethereum 2.0 approaches, the correlation between Ethereum 2.0 and ETH price appears to be getting stronger.”

Analysts had anticipated this trend, given the importance of Ethereum 2.0, which is expected to increase the transaction capacity of the Ethereum blockchain network.

Since nearly $300 million worth of ETH has been deposited into the Ethereum 2.0 deposit contract address, this may also alleviate the selling pressure on ETH in the long run.

Breakout of a higher time frame

The price of ETH broke out of a two-year range as it surpassed $500 for the first time since May 2018. Since then, ETH has risen above $580, showing a strong uptrend with little resistance above $620.

If ETH surpasses $620, the next higher time frame resistance lies at $784, $915, and $1,200.

ETH/USD weekly chart. Source: TradingView.com

Traders expect ETH to move up to $620 in the near term and might consolidate above it until the next breakout.

Anonymous trader “Rookie” said that ETH could hit $620 in a few days as it shows a strong uptrend from a technical point of view.

Although both Bitcoin and Ethereum prices fell back over the weekend, quantitative trader and analyst Qiao Wang said the TWAP (time-weighted average price) algorithm could lead to a revival of the rally again.

Fundamentals support this rise

According to data from Etherscan, daily gas usage on Ethereum is at an all-time high.

The term "gas" refers to transaction fees on the Ethereum blockchain network. When gas usage is high, user activity on the chain increases.

Ethereum daily gas usage Source: Etherscan

The increase in daily gas usage is likely coming from two sources: ETH deposited into Ethereum 2.0 addresses and the growing number of decentralized finance (DeFi) users.