Ethereum price has been on a three-day rally, compensating for its last week’s losses. The largest altcoin by market capitalization has climbed by more than 43% in the year to date and nearly 4% in the past week. As of the time of writing, ETH was trading 2.66% higher at $1,720.53.

Catalysts Behind ETH’s Rally

Ethereum price has been on a strong bullish uptrend for the past three days, following closely behind Bitcoin. Over the past 24 hours, Ethereum’s total market capitalization has jumped nearly 9%, while the total volume of the altcoin traded rose 81%.

There are several catalysts behind Ethereum’s rally. First, the overall bullish sentiment in the crypto market has pushed the second-largest cryptocurrency higher. Statistics by CoinMarketCap show that the overall crypto market cap has skipped 7% higher over the past 24 hours to $1.12 trillion. The total crypto market volume has also climbed 60% over the last day.

Second, while most coins are experiencing inflation, Ethereum’s supply is deflating. Last year, Ethereum’s network completed a Merge, which works to reduce the amount of ETH circulating. Throughout the months after the Merge, Ethereum’s supply has been decreasing steadily. A decline in supply serves as a bullish basis for the altcoin since lower supply means increased demand which is a recipe for spiked prices.

Third, Bitcoin’s rally has seen most digital assets jump higher over the last three days. Bitcoin price has been on a three-day rally boosted by the decline in the US inflation in January. Being the largest cryptocurrency by market cap, BTC’s performance affects the overall outlook in the crypto sector. Bitcoin’s dominance has increased by 0.88% to 42.76% in the past 24 hours.

Ethereum Price Analysis

Ethereum price has been among the strongest cryptocurrencies since the start of the year. The altcoin was hovering slightly above the key resistance level of $1,700 later Thursday. On the daily chart, ETH has managed to move above the 25-day and 50-day moving averages. Its Relative Strength Index (RSI) has moved higher, pointing to an increase in buying pressure.

Therefore, with enough liquidity and volatility in the market, Ethereum is likely to extend its rally as buyers target the important resistance level of $1,800. A breach above the aforementioned resistance level will see ETH move to the key resistance level of $2,000.