Following Bitcoin’s upward movement, the Ethereum price rose to USD 447 and now traders anticipate an upward trend towards USD 500 and above.
On November 6, Ether’s price (ETH) rose to USD 447 at Binance when the price of Bitcoin (BTC) fell to USD 15,500 after losing strength by around USD 15,900. Based on Ether’s strong momentum, traders anticipate a broader rebound in the short term.
There are three possible reasons why Ether could see a big uptrend in the coming weeks. The catalysts are an optimistic technical structure with a high time frame, favourable metrics in the chain and the launch of ETH 2.0.
ETH is optimistic in the higher time frames
In September, a trader and pseudo-artist known as „Crypto Capo“ tweeted a weekly chart from Ether that describes two possible scenarios.
The bearish scenario showed a rejection of the USD 360 support level followed by a sharp drop. The bullish scenario showed a confirmation of USD 360 as a support level and a potential run as high as USD 800.
Digital meeting to discuss Ethereum 2.0 progress
ETH/USD weekly chart. Source: Crypto Capo, TradingView.com
Referring to the USD 360 support level, the trader said:
„If this level holds, we should see USD 815 in the coming months. Invalidation on the chart“.
Since making this prediction, over the past two months, Ether has successfully defended the USD 360 macro support area. He is currently testing the USD 450 resistance level, which remains a strong resistance area through 2020.
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When a major resistance level is broken, a breakout rally could occur quickly and that is why traders are speculating on the price of the Ether much more than in previous weeks.
Skew’s data also shows that the volume of 24 hour futures for Ether has increased substantially since the end of October. This shows that traders are pointing to USD 450 as an important level for ETH and are either defending it or trying to beat it.
ETH’s daily futures volume. Source: Skew
Fewer ETH address holders make a profit
According to IntoTheBlock data, 75% of Ethereum’s addresses are currently profitable. In comparison, 98% of Bitcoin addresses are state-owned.
In general, investors are more likely to sell when they have large unrealised gains than when their investments decline significantly. As such, a substantially lower number of profitable addresses for Ether compared to Bitcoin is a positive metric that supports the thesis that the upturn has room for continuation.
ETH 2.0 is another bullish factor
Currently, the launch of ETH 2.0 is scheduled for December 1st and some analysts speculate that this could cause a supply shortage.
Ethereum 2.0 begins the launch process as the deposit contract is activated
Under the ETH 2.0 participation system, users can stake 32 ETHs and, in return, receive a 15% incentive on their shares. The participation process means assigning ETH to the addresses in the ETH 2.0 contract. During the staking period, users cannot use or transfer their ETH unless they decide to stop staking.
If the popularity of staking grows, as it can generate a stable return with relatively low risk, it would cause the circulating supply of ETH to decrease dramatically, especially in exchanges.
Less ETH would be sold and more would accumulate as users move towards staking their shares. This could create greater demand for the higher alternative currency and result in Ether’s price remaining above the USD 450 level.