Ethereum price has bounced back and is slowly approaching its all-time high. The ETH token is trading at $4,755, which is about 21% above the lowest level in November. It is just a few points below its all-time high. This price action means that the coin’s market capitalization has bounced to more than $563 billion.
ETH rises amid Fed tapering talk
Ethereum price has defied the overall hawkish talk by the Federal Reserve. In November, the central bank started tapering its asset purchases by about $15 billion per month. And on Tuesday, the Federal Reserve warned that the bank will accelerate this tapering considering that inflation is expected to keep rising.
The end of quantitative easing will be followed by higher interest rates. Historically, risky assets like cryptocurrencies tend to do well in a period when the Fed is tightening. For example, Bitcoin and Ethereum price declined sharply in 2018 as the Fed made four rate hikes.
Ethereum is bouncing back for several reasons. First, analysts believe that it will be a big winner as new themes emerge in the cryptocurrency industry. For example, it is already benefiting from the concept of metaverse since it powers some of the biggest players in the industry like Decentraland. It is also benefiting from leading industries like non-fungible tokens (NFT) and gaming.
Meanwhile, the decentralized finance (DeFi) industry is doing relatively well. Ethereum is home to about 320 projects that have a combined total value locked of more than $180 billion. This is a remarkable performance since the industry was largely unexistent a few years ago.
Therefore, while Ethereum is facing significant competition, the reality is that it is in a world of its own. For example, its TVL is more than that of all other Ethereum-killers combined. For example, the Binance Smart Chain (BSc) has a TVL of about $19 billion while Solana has a TVL of about $14.8 billion.
Ethereum price prediction
On the four-hour chart, we see that the Ethereum price found a strong support at $3,970 in November. Since then, the coin managed to pass the key resistance at $4,547, which was the highest level on November 25. It is now approaching its all-time high and has formed a cup and handle pattern.
Also, the coin has moved above the 25-day and 50-day moving averages. Its MACD has also kept rising. Therefore, there is a likelihood that the ETH price will soar to $5,000 in December.
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