ETHGas native token, GWEI, has more than doubled from June lows below $0.10 to over $0.20. In fact, the token was up over 750% from the February lows, making it one of the best-performing altcoins despite the broader crypto market contraction.
In fact, on Saturday, the 13th of June, bulls were on the verge of cracking a key ceiling that has blocked further uptrend since the beginning of the year (trendline resistance, dotted white line).
At the same time, technical indicators were flashing potential buyer exhaustion. So, which way for GWEI’s parabolic move?
What’s next for ETHGas rally?
On the price chart, the latest leg of the rally was triggered from the golden zone (50%-61.8% Fibonacci levels). In fact, this zone also acted as a support in April, making the $0.10 a key demand line if GWEI profit-taking surges.
That said, the rally could still extend to the upside target at $0.25 with a potential 18% gain if hit. But such a move could be confirmed if the GWEI decisively stays above the trendline resistance.
However, should it falter at the multi-month roadblock, $0.16 and $0.10 could be the next key support levels to watch out for.
Worth pointing out that the daily chart RSI (relative strength index) had entered the overbought territory. This suggested that a buyer’s exhaustion couldn’t be overruled.
If the exhaustion creeps in and GWEI fails to stay above the trendline resistance, then a cool-off could be likely.
What’s driving ETHGas pump?
For the unfamiliar, ETHGas is a marketplace that allows users to buy blockspace upfront, even during network congestion. It was designed to address the Ethereum gas fee problem, but it goes beyond.
It’s a futures marketplace, more like a prediction market, that can help gauge when demand for blockspace will spike or ease. So, it also allows users to hedge accordingly.
In fact, to some extent, there has been a close correlation between GWEI price action and the price of gas or demand for blockchain space.
Notably, there was a spike in gas prices in mid-May and early June. This meant there was relatively higher demand for blockchain.
Over the same period, GWEI pumped 250% and 130%, respectively. Currently, the blockchain demand has tapered off, and if the correlation holds, GWEI’s rally could also cool off.
Final Summary
- ETHGas’s GWEI doubled from $0.10 to $0.20 and could add another 18% gain if the uptrend extends.
- However, the recovery could face a potential cool-off as a technical indicator flashed potential buyer exhaustion.
