Key Ethereum takeaways:
- Ether eyes a run-up towards $6,500 as it paints a textbook bullish pattern.
- Its strong positive correlation with Bitcoin is also adding flare to its upside outlook in the fourth quarter of 2021.
- Additionally, the Ethereum supply crisis is deepening.
YEREVAN (CoinChapter.com) — Ethereum’s native token Ether (ETH) could reach $6,500 by the end of this year as it paints a classic bullish pattern.
Dubbed “Ascending Triangle,” the pattern surfaces when the price makes two or more troughs to conceive a rising trendline and two or more equal highs to form a horizontal trendline on the top. Placed together, these trendlines appear like a right-angle triangle.
Studies show that the price typically breaks out of Ascending Triangles in the direction of its previous trend, which has earned them the title of continuation patterns. Ether’s formation of the same structure follows a supersonic price rally in 2021, underscoring that its break above the Triangle’s horizontal trendline (with a rise in trading volume) would push its prices higher.
Related: Altseason ahead as Ethereum prepares to post massive breakout against Bitcoin
But to which level? Classic ascending triangle breakouts tend to send prices at length equal to the maximum distance between the structure’s upper and lower trendline. In Ether’s case, that height is around $2,420.
So, with the horizontal level placed around $4,000, ETH could grow by another $2,420 after closing above the said Triangle resistance.
As a result, Ethereum’s ascending triangle pattern puts ETH en route towards $6,420 — just shy of $6,500.
Friendly Bitcoin correlation
The bullish outlook for Ether emerges as it continues its positive correlation with Bitcoin (BTC), the world’s leading cryptocurrency by market cap.
According to Crypto Watch, the 30-day correlation efficiency between Bitcoin and Ether sits at 0.82. In simple words, there is an 82% probability that BTC and ETH will move in tandem in the coming sessions. That — literally — puts ETH en route to $6,500.
Related: World’s largest Bitcoin investment vehicle enters the ETF race as BTC hits $64,000
One of the main reasons it may happen is Bitcoin’s watershed foray into Wall Street with the launch of its first-ever exchange-traded fund. The ProShares Bitcoin ETF (Ticker: BITO) debuted on Tuesday with a 4.9% rise to $41.94, creating a traditional avenue for investors to gain exposure in BTC markets.
Analysts have already made bold bullish calls for Bitcoin on the prospects of an ETF’s role in raising the cryptocurrency’s demand. For instance, Tom Lee, co-founder of Fundstrat Global Advisors, said that Bitcoin ETFs could witness inflows of more than $50 billion in its first year alone, adding that it could send the BTC price up to $168,000.
As a result, Bitcoin’s strong positive correlation may put Ether on the same bullish path.
Ethereum supply crisis
Ethereum is not relying only on Bitcoin for improving its upside outlook.
Data collected by blockchain analytics service CryptoQuant shows a consistent decline in Ether’s reserves across all exchanges and a constant increase in its inflow into the Ethereum 2.0 deposit contract.
A constantly declining active supply against a booming demand — thanks to the ongoing craze in the Ethereum-powered nonfungible token (NFT) and decentralized finance (DeFi) sector — promises to send ETH prices higher.
“Ethereum will be a 10 trillion dollar network one day,” wrote independent crypto analyst Sasal.Eth, adding:
“At the current supply, that would give ETH a price of ~$85,000. Post-merge, and assuming current fee revenues, ETHs circulating supply will reduce with every block. This is ultrasound money.”
