- Ethereum is up 45% in May so far, testing 200-day SMA resistance at 11-week high.
- ETH’s Pectra upgrade, rising funding rates on perpetual contracts and strong Open Interest favor bulls.
- Broad risk-on mood, technical breakout add strength to ETH/USD’s upside momentum.
- Overbought RSI, key SMA hurdle may test ETH rally but bears are far gone.
Ethereum (ETH/USD) is set for its biggest monthly gain since November 2024, breaking a four-month downtrend, even if the 200-day Simple Moving Average (SMA) tests upside momentum during Wednesday’s European session. That said, the ETH/USD pair is up 45% in May, despite retreating from an 11-week high to $2,612 by the press time.
Earlier this week, ETH briefly surpassed Coca-Cola’s market cap, driven by excitement over the Pectra upgrade and positive market sentiment fueled by the US-China trade deal.
An over-the-counter (OTC) trader at crypto broker Abra Prime, Alex Cheung, cited completion of Ether’s long awaited Pectra upgrade as the blockchain’s biggest overhaul since 2022. The upgrade was intended to make Ethereum cheaper, faster and efficient while also improving user experience and lay the groundwork for future upgrades.
Following the Pectra news, the ETH/BTC ratio jumped and so did the total Open Interest (OI) in Ether derivatives, up 21% to $25.8 billion on May 8.
In addition to the OI and ETH/BTC ratio, the positive performance of funding rates for perpetual contract, suggesting buyers are ready to pay a premium to holders of short positions, also portrayed a rosy picture of the Ethereum.
Additionally, institutional interest, like from Abraxas Capital, and strong on-chain activity show growing confidence in Ethereum as the leader in smart contracts. With this, Ethereum is poised for its biggest monthly gain since November 2024, though questions remain about its ability to surpass Bitcoin as the top crypto.
ETH/USD: Technical Analysis
Ethereum (ETH) price retreats to a key support zone, previous resistance, around $2,550-$2,600, following a retreat from the 200-day SMA at $2,702. The pullback also aligns with overbought conditions of the 14-day Relative Strength Index (RSI) 14 line, signaling a potential pause in momentum.
Technical analysis: Daily chart suggests looming pullback
Source: Trading view
However, bullish signals from the Moving Average Convergence Divergence (MACD) indicator and a strong hold above the 100-day SMA, as well as a five-month-old descending trend line, respectively near the $2,091 level and the $1,960 level, keep bearish pressure in check.
That said, Ethereum bears could regain control only if prices drop below $1,960. Until then, a potential rally toward the February high of $2,855 and even $3,000 remains possible. However, surpassing $3,000 may face resistance with multiple hurdles between $3,100 and $3,500.
