Key Ethereum Takeaways
- Ethereum’s native cryptocurrency token could rally to $20,000, feels crypto investor Lark Davis.
- Ether looks to post breakout rally against Bitcoin on the weekly chart.
- The ETH/USD pair is about to print a repeat of the post-September rally on the daily chart.
- A flurry of other fundamental factors indicates that sky is the only limit for ETH prices.
JAIPUR (CoinChapter.com) – Ethereum ecosystem developments and bullish technical setups of its native currency Ether prompted Lark Davis to predict a $20,000+ target for ETH. The Twitter-based cryptocurrency investor listed out the reasons for ultra-bullish bias in an extensive Tweet thread.
“#ethereum will go to 5 digits during this bull market, we could even see $20,000 or more in play.”noted Davis as he proceeded to supply proofs to support his bullishness
Bullish Weekly And Daily Technical Setups
Ascending Triangle On ETH/BTC Weekly
While explaining his case for an Ether market of five-figure ETH prices, Mr. Davis first pulled out the weekly chart of the second-largest cryptocurrency against Bitcoin. The chart showed the ETH/BTC pair forming an Ascending Triangle setup which is generally considered bullish by most traders.
However, the bullish technical setup formed after a prolonged accumulation phase across MORE THAN THREE YEARS. TradingView-based crypto trader and analyst The Signalyst noted the same in a recent analysis.
“First, we had an inverse head and shoulders formed around 0.01-0.02 demand zone , then the bulls took over by breaking above the gray neckline.”said TheSignalyst
The rally beyond the gray neckline materialized as ETH prices rallied towards $4,400 in April 2021. A run from 0.03 to 0.083 resulted in an almost 64% appreciation of Ether’s value against Bitcoin.
“We had our first impulse movement, and we are currently in a correction phase in the shape of an ascending triangle .”
The above spike formed the flagpole of the ETH/BTC pair’s current Ascending Triangle formation. The pair could explode beyond the triangle’s upper trendline soon, in accordance with the length of the flagpole. Additionally, a double bottom pattern further fuelled the ETH/BTC pair’s upside bias.
Daily Chart Indicating An October Style Rally
A 64% rally from current prices would place Ether at $7,500, which the daily ETH/USD chart corroborates. The pair looks primed to repeat the run-up phase from October, which led ETH to post its last all-time high at $4,870.
Closing above $7,500 would open the gates for a run towards $8,000 and beyond. The moving average convergence divergence (MACD) indicator flipped green, and the relative strength index (RSI) with a 56.65 reading implied incoming buying pressure.
But apart from technical setups, fundamental developments within the Ethereum ecosystem further solidified the possibility of the top smart contract blockchain token nearing $20,000.
Uptrend Supporting Fundamental Pointers
Ether Supply Depletion
As Lark pointed out, ETH balances on cryptocurrency exchanges have continued to test new lows. Ethereum’s exchange outflow has been going on for over a year. ETH’s ‘buying and HODLing’ sentiment remains pretty strong, especially after the London hard fork and the Altair upgrades.
“ETH on exchanges continues to fall. Early 2020 was “peak ETH”, balances on exchanges will never be that high again.”said Lark
Also, Ether staked in the ETH 2.0 staking contract address surpassed the 8 million mark recently. To be precise, investors have sent 8.5 million ETH tokens to the next generation Ethereum blockchain’s passive income system.
Such humongous growth in ETH 2.0 staking figures indicated a rapidly depleting Ether supply from the top altcoin’s circulating supply. The constant burning (read sending to inaccessible wallet addresses) of ETH added to the bullishness due to the seeping disinflationary feature triggered by the EIP-1559 update of the London Hard fork
“Ethereum burning is going insane! We recently passed the million ETH burn threshold, and we have been seeing consistent days of negative issuance for ETH. Supply side crisis in full swing.”observed Mr. Davis
Layer 2 Adoption & Sharding
Prominent Ethereum Layer 2 scaling solutions have experienced a surge in adoption due to sporadically rising gas fees on the original layer 1 blockchain. zk-Rollup-based layer 2 platform, Loopring recently experienced an explosive surge in demand due to drop dead costs to process transactions. The team even claimed to have facilitated trades worth billions of dollars with no gas fees.
Optimistic Rollups too ballooned, especially Arbitrum. Plus, EIP-4488 posed recently by Ethereum founder Vitalik Buterin could see fees drop by a factor of 5 on all Rollup networks.
The advent of sharding would increase the efficiency of the Ethereum network and increase throughput significantly.
Ethereum received a massive upside boost from the institutional herd, who realized the long-term impacts of the public blockchain, and its potential to redefine finance and art. As a result, ETH ETFs could soon debut in traditional financial markets; Lark pointed out.
Technology investing giants such as ARK Invest boss Cathie Wood are already knee-deep in both belief and long positions on Ether. Trading volume on Coinbase also reflects that deep-pocketed players are looking to get involved with ETH for a long time.
“Institutional interest is rising with Cathie Wood allocating 40% of Ark’s crypto portfolio to ETH. Coinbase trading volume also shows again that ETH not BTC has been the preferred purchase of big money players.”Lark said quoting a recent Benzinga piece that discusses the same.
Finally, Mr. Davis attributed the exponentially expanding NFT, DeFi, gaming, metaverse, and miscellaneous other applications as the significant factors that might lead ETH investors to believe that “$20,000 is not a crazy price target at all!