ETH’s constrained supply rate didn’t stop the coin from hitting a new high as the price increased thanks to the on-chain fundamentals that led it over $730. In our latest Ethereum news, we can take a closer look at the price analysis.
The ETH-to-dollar exchange rate climbed up to 8.72 percent to $470 which is a level that tested in May 2018. The pair’s upside move came during the wake of Bitcoin correcting which on Sunday increased to a new high of $28,377. So it seems that the traders prefer to sell BTC at its top and to see more opportunities in a low-trading ETH which has strong fundamentals that include its blockchain protocol and its upgrade to proof-of-stake that pointed to a long-term bullish outlook. Some analysts agree that the ETH price will close above $1000 next year.
ETH’s constrained supply rate didn’t really do much for the price as Ryan Watkins from Messari, stated that the institutions could start buying ETH in 2021 as they explore profitable crypto alternatives beyond BTC:
“It’s a much easier jump from BTC to ETH from there.”
The main fundamental behind ETH’s wild upside move is the classic supply-demand model so switching to a proof-of-stake means that more people will lock their coins into ETH 2.0 smart contracts to earn more annual percentage yields by removing a good supply from the market. it seems that this is already happening after the early December protocol upgrade. According to Santiment, the ETH balance on exchanges dropped to 1.5 year low which means fewer traders want to exchange their ETH holdings for other assets in the short-term. while in the same time, ETH miners’ balances crashed to low levels that were seen two years ago. Santiment continued:
“Both are great validators.”
The biggest bullish catalyst for the second-biggest cryptocurrency is not coming from the US dollar but from the BTC-pegged traders. The ETH/BTC traders expressed their conviction for the bullish bias as the pair aims to bottom on the longer timeframe charts. it signals at the start of the so-called altcoin season where the traders exit their BTC positions to seek more profitability in alternative crypto assets.
The weekly close of ETH on the BTC pair shows a bottom as per Michael Van de Poppe:
“Closed above the crucial threshold of this range, indicating further upwards momentum [will] occur, and another HL is created.”
In the meantime, the analyst Edward Morra spotted an inverse head and shoulder pattern of the pair’s weekly chart, noting that the technically bullish pattern will send the pair up by 150%.