Ether Slips from Highs as Investors Lock in Profits After Upgrade—Key Levels to Watch

Ether (ETH), the native coin of the Ethereum blockchain and second largest cryptocurrency by market capitalization, traded more than 5% lower early Friday morning, days after the network successfully completed its highly anticipated Dencun upgrade, indicating investors may have already factored in the news.

The enhancement, which aims to improve the Ethereum ecosystem’s cost-effectiveness, added to bullish sentiment surround Ether, helping propel the cryptocurrency through the $4,000 level earlier this week. “Dencun will change how Ethereum developers build smart contracts, leading to more secure and user-friendly applications,” Richard Meissner, co-founder of Safe, told Cointelegraph in an email.

In addition to the Dencun upgrade, Ether has ridden tailwinds of ongoing record flows into spot Bitcoin exchange-traded funds (ETFs) and growing expectation that the cryptocurrency itself could soon have its own spot ETF. Investors are hoping that the U.S. Securities and Exchange Commission (SEC) will approve an Ether ETF application filed by asset manager BlackRock on May 23, though Bloomberg ETF analysts estimate the chances of an approval by that date at just 30%.

These recent bullish factors may already be baked in the cake. On Tuesday, Ether put options, a financial instrument that protects holdings in the cryptocurrency from potential price downturns, traded at a premium to Ether call options expiring over the next 30 and 60 days. Singapore-based digital assets trading firm QCP Capital said this shift in sentiment, combined with high levels of leverage in the market, may lead to a correction, but that it expects dips to be short lived.

Ether started it’s current bull run in late October last year, with the uptrend gaining further momentum when the 50-day moving average crossed above the 200-day moving average just over a month later to form a bullish golden cross chart pattern. Gains accelerated throughout February and early March before the price ran into resistance earlier this week just above the closely watched $4,000 level. Amid ongoing selling pressure, monitor key Fibonacci retracement levels as potential areas of support. Currently, the 38.2% Fib level sits around $3,365, while the 50% Fib level lines up with the $3,135 region.

Ether was at $3,665 at around 6:30 a.m. ET.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the above securities.