The Ethereum blockchain’s native asset ETH shows great prospects for an explosion to $ 6,500 in the upcoming sessions.
This bullish view is based on signals from the “Cup and Handle” technical pattern. In particular, the cup and handle structure forms when the price rises sharply and then corrects to create a rounded bottom known as a “cup”.
Next, the price rallied to the previous high but was unable to break out of that level. As a result, the price drops again and a smaller round bottom is created, the so-called “handle”.
Eventually the price returned to previous highs for the second time and successfully broke out, moving to the bottom of the cup.
So it looks like ETH drew the mug and is now forming a handle, as shown in the graphic below.
ETH chart daily forms a pattern Cup and handle | Source: TradingView.com
The depth of the cup is close to $ 2,437. If the pair retests the $ 4,112 resistance to hit a bullish breakout, the odds that ETH will rebound to $ 2,437 are high. The price rises to $ 6,549.
A study from Harvard University shows Cup and handle patterns on the daily forex and stock markets chart have a success rate of 65% and 68%, respectively.
Organized by FOMO
ETH’s bullish pattern comes amid growing institutional investor interest in the second largest cryptocurrency.
In one report Announced on Sept. 7, Standard Chartered, a multinational banking giant headquartered in London, discussed the ETH economic use case, adding that the cost of acquiring an ETH could rise to $ 26,000- $ 35,000 in the future.
“The current transition to ETH 2.0 could transform ETH by increasing its functionality and scalability while reducing environmental concerns, although it could pose many security problems. The timelines for the implementation of ETH 2.0 may be delayed, but in the short term a decline in net supply (as ETH is involved in ETH 2.0) should provide upward momentum.
In an interview with CNBC, Cathie Wood, CEO of Ark Invest, said that her company will split crypto investments into 60% Bitcoin and 40% ETH. The former board of directors of AllianceBerntein points to higher demand for ETH tokens in light of the growing Ethereum-backed DeFi and NFT craze.
“I am intrigued by what is happening at DeFi that is cutting infrastructure costs for financial services in ways that the traditional financial industry does not currently appreciate. Our trust in ETH has increased significantly since the transition from PoW to PoS began. “
8 million ETH withdrawn from circulation
The circulating supply at ETH is decreasing exponentially.
Since the introduction of the ETH 2.0 deposit agreement late last year, over 46,800 senders have blocked almost 7.7 million ETH, or about $ 28 billion at the time of going to press.
The source: Dune analysis
The implementation of EIP-1559 during the London hard fork on August 5th also reduced the number of tokens in circulation. follow statistical, more than 303,000 ETH, valued at approximately $ 1.1 billion, have been burned to date.
In total, around 8 million ETH (worth $ 28.8 billion) were withdrawn from circulation due to the ETH lock in the staking contract and the offer burned by EIP-1559.
Cumulative value of the ETH burned according to EIP-1559 | The source: Etherchain, crypto comparison
The sharp decline in supply in recent months has also had an impact on the stock exchanges.
The number of tokens available on the trading platform plummeted to a 3-year low of 19.45 million ETH. Meanwhile, the offer outside the stock exchanges reached a new all-time high of 98.31 million ETH.
ETH price (green), stock exchange offer (pink), over-the-counter offer (red) | The source: Mood
The increasing number of tokens that are being withdrawn from circulation, combined with the scarce supply in exchange wallets, paints a positive picture, which signals a potential upward potential for ETH in the future. Technically, a smaller amount of ETH for sale will limit the downside risk.
Despite many positive signs, Ethereum faces a lot of criticism for not being able to solve the problems of higher transaction fees and heavy network congestion. This has created the opportunity for emerging Layer 1 blockchain competitors like Solana, Avalanche and Cardano to secure a piece of Ethereum’s market hegemony.
According to the official roadmap, Ethereum will take another 2 years to become a fully functional PoS protocol. The conversion process consists of three steps. In the first step, Ethereum implemented Beacon Chain to introduce staking on a separate level.
In the next step, which is planned for the end of 2021, the original chain of Ethereum will be merged with the Beacon Chain. In the meantime, Ethereum will introduce a “shard chain” that will enable further transactions to be processed in the final phase.
Short term price analysis
ETH / USD
Major support levels: $ 3,530, $ 3,350, $ 3,200.
Major Resistance Levels: $ 3,790, $ 3,975, $ 4,000.
Ethereum attempted to establish support at USD 3,200 (0.5 Fib) late last week. It was further bolstered by the 50-day MA and allowed ETH to begin its recovery earlier this week.
Yesterday the cryptocurrency rose from $ 3,400, breaking resistance at the 20-day MA, to hit $ 3,600. This move is important as it shows that buyers are trying to recover from last week’s market correction.
ETH / USD daily chart. Source: TradingView
On the way up, ETH encountered initial resistance at $ 3,790 (Fib 0.786 bearish). This is followed by $ 3,975 (Fib extension 1,272), $ 4,000, $ 4,200 (Fib extension 1,414), and $ 4,280.
If the price goes down, the initial support is at USD 3,530 (20-day MA). This is followed by USD 3,350, USD 3,200 (Fib 0.5 & 50-day MA) and USD 3,000 (Fib 0.618).
The daily RSI is back above the midline and starting to rise. This shows that the buying momentum is steadily increasing.
ETH / BTC
Major support levels: 0.074 BTC; 0.0711 BTC; 0.07 BTC.
Key Resistors: 0.0765 BTC; 0.0787 BTC; 0.08 BTC.
ETH is also trying to rebound against BTC after regaining its 20-day MA yesterday. The cryptocurrency fell from 0.0787 BTC in early September and continued to decline until it found support at 0.0711 BTC (Fib 0.382) last week.
Since then, ETH has managed to hold above 0.072 BTC and bounced back yesterday to break the August high at 0.0733 BTC again and hit its high today at 0.076 BTC.
ETH / BTC daily chart. Source: TradingView
On the upside, the first resistance is at 0.0765 BTC (Fib 0.786 below). Next is 0.0787 BTC; 0.08 BTC; 0.082 BTC (Fib extension 1,272) and 0.0839 BTC (Fib extension 1,414).
On the other hand, the initial support is at 0.074 BTC (20-day MA). This is followed by 0.0711 BTC (Fib 0.382), 0.07 BTC (50-day MA) and 0.068 BTC.
The RSI will stay above the midline as buyers remain in control of market dynamics. The recent surge shows that the bullish momentum is also escalating.
You can see the ETH price here.
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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
According to Cointelegraph