Ethereum prices spiked on Monday as fundamentals in the chain confirmed supply restrictions on all leading exchanges against rising demand.
The Ethereum to dollar exchange rate rose as much as 8.72 percent to $ 740, a level last tested in May 2018. During the day, the pair’s upward move was due to a correction in Bitcoin, which rose to a new high of $ 28,377 on Sunday.
Ethereum is consolidating higher in a Wedge-like pattern. Source: ETHUSD on TradingView.com
So it seems that traders preferred to sell the Bitcoin top in order to look for opportunities in a low-trade Ethereum whose idiosyncratic fundamentals, including the widely publicized upgrade of the blockchain protocol to proof-of-stake, also lay out indicated a long-term optimistic outlook. Some analysts agreed that Ethereum price could close above $ 1,000 next year.
Ryan Watkins, senior research analyst at Messari – a crypto-focused data platform – said institutes may begin buying Ethereum in 2021 if they investigate profitable crypto alternatives beyond Bitcoin.
“It’s a much easier jump from BTC to ETH from there, ”he added.
The supply of Ethereum is decreasing
The main basis for the wild upward movements of Ethereum is the classic supply-demand model. The switch to proof-of-stake means that more people would tie their ETH holdings to the Ethereum 2.0 smart contracts in order to generate attractive annual percentage returns and thus take a good offer off the market. And so it seems that this will already happen after the protocol is upgraded in early December.
According to the data analytics platform Santiment, the Ethereum balance has fallen to a 1.5-year low on all crypto exchanges. This usually means fewer traders trying to swap their ETH holdings for other assets in the short term.
Ethereum supply metrics. Source: Santiment
Meanwhile, Ethereum miners’ balances have also dropped to the level last seen two years ago. This indicates a growing demand for over-the-counter and retail cryptocurrency.
“Both are great validators,” commented Santiment.
The biggest bullish catalyst for Ethereum doesn’t come from the US dollar, but from Bitcoin trading.
ETH / BTC traders have expressed their belief in a medium-term bullish bias as the pair appears to have bottomed on its longer time frame charts. Traditionally, it signals the beginning of what is known as an “altcoin season,” in which traders are leaving their Bitcoin positions to seek profitability in alternative cryptocurrencies.
The weekly close of Ethereum on the BTC pair is signaling a bottom, as presented by Michaël van de Poppe. Source: ETHBTC on TradingView.com
“Closed above the critical threshold of this area, indicating further upward momentum [will] occur and another HL will be created, “said Michaël van de Poppe, an independent market analyst, adding that this is a” good sign “for Ethereum.
Meanwhile, analyst Edward Morra spotted an inverted head and shoulders pattern on the ETH / BTC weekly chart. He noted that the technically bullish pattern could push the pair up as much as 150 percent.
Ethereum inverse head and shoulder pattern, as presented by Edward Morra. Source: ETHBTC on TradingView.com
Mr Morra’s long-term target price for ETH / BTC is 0.05.