The native ETHGas token, GWEI, more than doubled from the June low below $0.10 to above $0.20. In fact, the token is up more than 750% from February lows, making it one of the best-performing altcoins despite the broader crypto market contraction.
In fact, on Saturday, June 13, the bulls were close to breaking through a key ceiling that blocks the continuation of the year-to-date uptrend (trend line resistance, dotted white line).
At the same time, technical indicators indicated an exhaustion of potential buyers. So, which direction for GWEI parabolic movement?
What’s next for the ETHGas rally?
On the price chart, the final leg of the rally was triggered from the golden zone (50% to 61.8% Fibonacci levels). In fact, this area also served as support in April, making $0.10 a key demand line in case of increased profit-taking from GWEI.
That said, the rally could further extend to the $0.25 upside target, with a potential gain of 18% if reached. But such a move could be confirmed if GWEI remains resolutely above trendline resistance.
However, if it falters after a multi-month roadblock, $0.16 and $0.10 could be the next key support levels to watch.
It is worth noting that the daily chart RSI (Relative Strength Index) had entered overbought territory. This suggested that a buyer’s exhaustion could not be ignored.
If exhaustion sets in and GWEI fails to stay above trendline resistance, then a cooldown could be likely.
What drives the ETHGas pump?
For those unfamiliar, ETHGas is a marketplace that allows users to purchase block space in advance, even during network congestion. It was designed to solve the Ethereum gas fee problem, but it goes beyond that.
This is a futures market, more like a prediction market, that can help gauge when demand for block space will increase or decrease. Thus, it also allows users to hedge accordingly.
In fact, to some extent, there is a close correlation between GWEI price action and the price of gas or demand for blockchain space.
In particular, there was a tip gas prices in mid-May and early June. This meant that there was a relatively higher demand for blockchain.
During the same period, GWEI pumped 250% and 130%, respectively. Currently, the demand for blockchain has declined and if the correlation holds, GWEI’s rally may also calm down.
Final summary
- ETHGas’ GWEI doubled from $0.10 to $0.20 and could add an additional 18% gain if the uptrend continues.
- However, the recovery could face a potential slowdown as a technical indicator signals potential buyer exhaustion.
