Ethereum’s native token, Ether (ETH), could grow 35% against Bitcoin (BTC) this year, reaching 0.1 BTC for the first time since 2018, forming a classic bullish continuation pattern.
Ethereum price must break the major resistance first
The pattern, dubbed an ascending triangle, forms when the price fluctuates within a range defined by an ascending trendline support and horizontal trendline resistance. It usually resolves after the price breaks out in the direction of its previous trend.
On the weekly chart, the ETH/BTC pair has been charting an upward pattern since May 2021. The Ethereum token is seeing a break above the horizontal trend line resistance of the pattern near 0.0776 BTC. A break of this level may lead the price to the maximum height of the triangle.
In other words, the ETH/BTC pair could reach the next major resistance level at 0.1 BTC in 2023, or 35% of the current price levels.
However, it is important to note that ETH/BTC has attempted to breach the triangle resistance trendline eight times since May 2021. The attempts included two major breaches in November 2021 and September 2022 as the pair gained 14% and 9%, respectively.
Both rally failed in the range of 0.082 to 0.085 BTC, followed by severe price corrections that sent ETH/BTC back into the triangle range. Given this multi-year hurdle, the pair could face heavy resistance within the 0.082-0.085 BTC range even if it breaks above the triangle.
Such a move would risk ETH falling towards the triangle support, which coincides with the 50-week exponential moving average (50-week exponential moving average), which is represented by the red line on the above chart, near 0.070 BTC, i.e. approximately 6% less than the current one. One – price levels.
Listing the “deflation” of ETH
A bullish setup for Ether vs Bitcoin is emerging as ETH’s dominance against other crypto assets has doubled in recent years.
Notably, the market capitalization of ETH rose to approximately 20.5% of the total crypto market valuation in January 2023 from around 10% in December 2020 when the Ethereum network began its proof-of-work (PoW) to proof-of-stake (PoS) transition with the launch of a dedicated smart contract. for staking.
The acquisition of the PoS blockchain has brought two major changes to the Ethereum economy. First, users temporarily lock a portion of their Ether holdings into an Ethereum PoS smart contract to get a payout. And secondly, the Ethereum network is starting to burn off some transaction fees.
Both changes had a deflationary effect on aggregate supply. As a result, the Ethereum network now regularly produces fewer Ether tokens that are withdrawn from circulation, theoretically making ETH a “deflationary” asset.
The price of ETH/BTC has grown by nearly 250% since December 2020, although it is down nearly 50% from its all-time highs in 2017.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making a decision.