Home News Ethereum eyes rally against Bitcoin with ETH price showing hidden bullish divergence

Ethereum eyes rally against Bitcoin with ETH price showing hidden bullish divergence

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Since September 3, Ethereum’s native token, Ether (ETH), has been losing ground against leading crypto competitor Bitcoin (BTC).

After peaking at 0.07955 BTC in September, Ether has lost about 25% of its value against Bitcoin. As the top cryptocurrency fell in price, it left a trail of lesser highs and lows, establishing an Ascending Channel.

On Oct. 23, ETH/BTC breached the Channel to the upside, signalling the start of a powerful sustained rebound trend. However, traders have been testing the Channel’s resistance trendline as support as a result of a selloff on Oct. 24 and the current session.

Price charts for Ethereum show a bullish divergence

As seen in the chart below, the emotion increased Ether’s chances of re-entering the dropping range.

ETH/BTC daily price chart featuring bullish divergence. Source: TradingView

ETH/daily BTC’s Commodity Channel Index (CCI) reached higher highs at the same time, indicating concealed divergence against the pair’s decline. For the uninitiated, CCI is a momentum oscillator that detects probable reversals by measuring an instrument’s deviations from its statistical mean.

“A concealed divergence is always a sign of a potential trend reversal”, said Stefan Krecher, a market expert based in Germany. The pair’s daily relative strength index (RSI) is “not overbought”, he noted, suggesting that ETH/BTC may rally in the coming sessions.

Ether was expected to achieve its monthly pivot point at 0.071586 BTC, roughly 8% higher than current values, according to Krecher. The 0.618 Fib line (0.071505 BTC) of the Fibonacci Retracement graph in the chart above also corresponded to the upward goal.

Re-entering the Descending Channel range, on the other hand, risks bringing ETH/BTC to its range support trendline at 0.058238 BTC.

Ether price against dollar

The optimistic ETH/BTC price prognosis was confirmed Monday, as Ether held $4,000 as sturdy support while rising over 2.6%. Meanwhile, after establishing a similarly firm price floor at $60,000, Bitcoin’s price has retraced over 3.5%.

As a result, ETH/BTC seemed to be weaker since Bitcoin outperformed Ether versus the dollar. Despite this, the Ethereum token’s prospects appeared to be optimistic, as indicated in the Ascending Triangle arrangement below.

ETH/USD daily price chart featuring Ascending Triangle setup. Source: TradingView

On the daily period, Ether broke out of the pattern, but only with a little amount of trade activity, indicating price weakness.

For bullish confirmation, the cryptocurrency is currently testing the Triangle’s top trendline. If the price continues to rise, it might establish new highs over $4,384, with the Triangle setup’s goal of $6,500.

ETH supply shortage

Furthermore, since the Ethereum network’s London Hard Fork, the quantity of Ether tokens has been decreasing. The EIP-1559 enhancement proposal, which became active with the upgrade, began burning ETH that it had previously paid to miners.

Since the London Hard Fork’s inception, the Ethereum network has destroyed about $2.25 billion worth of ETH tokens, according to data gathered by WatchTheBurn.com.

Furthermore, the Ethereum 2.0 deposit contract has received almost 8 million ETH. As a result, they will be out of circulation for at least a year.

Total value staked in ETH 2.0 smart contract. Source: CryptoQuant

Furthermore, regulated funds’ Ether holdings have risen from 2.43 million ETH in November 2020 to 4.08 million ETH today, indicating rising institutional demand.

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