Ethereum (CRYPTO: ETH) proponents believe the crypto will outperform Bitcoin (CRYPTO: BTC) over time because Ethereum powers countless other cryptocurrencies built on its blockchain. Developers of other cryptocurrency projects prefer Ethereum’s high programmability, and all non-fungible tokens are currently traded on Ethereum’s network using its native coin Ether.
On Tuesday, the U.S. Senate approved the infrastructure bill, which will now head for debate in the House of Representatives. Harsh language pertaining to forcing individuals and businesses to report to the IRS was removed from the bill after Republicans rejected it. The current language in the bill will require only brokers of cryptocurrencies to report to the IRS.
The U.S. government has included cryptocurrency regulations in the infrastructure bill to help pay for the package.
News of the Senate passing the updated bill had little effect on Ethereum and Bitcoin, as both were consolidating.
Ethereum was trading up almost 3% higher Wednesday and trying to bust through overhead resistance, while Bitcoin continued to trade sideways.
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The Ethereum Chart: Ethereum completed a bullish quadruple bottom pattern on July 20 after hitting the $1,717 area previously on May 23, June 22 and 26. Ethereum then soared over 84% higher before consolidating in a sideways pattern beginning on Aug. 8.
Ethereum was trying to regain the $3,240 level as support Wednesday but was having difficulty, as the crypto’s relative strength index has been registering at an uncomfortably high 75% to 80% level since Aug. 4.
When a crypto, or stock, has an RSI of over 70%, it is technically in overbought territory, which can be a sell signal.
Ethereum is trading above the eight-day and 21-day exponential moving averages, with the eight-day EMA trending above the 21-day, both which are bullish indicators.
Ethereum is also trading about 46% above the 200-day simple moving average, which indicates overall sentiment in the crypto is bullish.
- Bulls shouldn’t mind seeing a few more days of sideways consolidation under resistance to cool Ethereum’s RSI down to under 70%. Bulls would then like to see big bullish volume come in and push Ethereum up over the $3,240 level. If the crypto can regain the level as support, it has room to rise up to the $3,610 area.
- Bears want to see big bearish volume come in and push Ethereum to the $2,890 area, which would cause the crypto to lose support of the eight-day EMA. If Ethereum can’t hold the level as support, it could revisit the $2,609 mark.