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Ethereum ‘has to bounce’ as ETH bulls pin $5K rally hopes on critical support channel

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Ether (ETH), Ethereum‘s native token, might witness another significant rally in the coming sessions as its price falls into a trading zone that has attracted purchasers in the past.

The rising trendline, which is part of a larger ascending channel range, has been driving ETH price recoveries since the beginning of October.

ETH/USD 4-hour price chart featuring the ascending channel setup. Source: TradingView

As a consequence, despite pullbacks at the channel’s upper trendline, Ether’s path of least resistance has been to the higher, with its quarter-to-date gains presently resting at over 38%.

The rising trendline was most recently important in suppressing sell-offs following Ether’s surge to a new record high above $4,870. As a result, analysts forecast another large price comeback in the future, with Forexn1’s “swing long” setup on TradingView predicting a bull run to $5,000.

ETH/USD 8-hour price chart featuring “swing long” setup. Source: Forexn1, TradingView

Following the current price fall, Ether “must recover,” according to MacroCRG, a Twitter-based independent market analyst.

Meanwhile, Pentoshi, another expert, predicted a comeback but warned that dips below the rising trendline were possible. In a Nov. 12 tweet, he said:

“A 20-30% wipeout on alts would be fantastic. Typical bull run trough. It doesn’t imply it will happen just because I desire it.”

Pentoshi’s downside goal, as indicated in the chart below, was about $4,000 in the case of a prolonged market fall.

ETH/USD 4-hour price chart featuring the ascending channel’s bearish breakout target. Source: Pentoshi, TradingView

Macro essentials support ETH bulls

More than simply technical reasons appear to be at play in Ether’s capacity to restrict price declines and, on top of that, make new highs.

Fears of excessive inflation, according to Chris Weston, head of research at Pepperstone Financial Pty, have raised the demand for possible hedging assets throughout the crypto market, resulting in price increases of 500% and 130% for Ether and Bitcoin in 2021.

“Crypto is where the fast money is at,” Weston said in a message to investors.

Furthermore, Mike McGlone, senior commodities analyst at Bloomberg Index, forecasted a $5,000 price for Ether last week, stating that “portfolios comprising some mixture of gold and bonds seem increasingly naked without some Bitcoin and Ethereum joining the mix”.

As a big positive backstop for Ether, the expert mentioned shrinking supply.

In August, Ethereum’s software upgrade, called the London hard fork, included a code modification that began burning a percentage of gas fees paid to miners in ETH, essentially limiting supply.

According to statistics released by Ultrasound.money, the update has resulted in the loss of about 860,500 ETH, which is currently valued at over $3.2 billion. The Ethereum network will burn 5.3 million ETH per year at its present rate, compared to 5.4 million ETH issued.

Ethereum fee burn. Source: Ultrasound.money

McGlone pointed out that a falling supply rate would keep Ether positive in the face of growing demand:

“As far as we can tell, keeping on course is the most likely conclusion. Ethereum has now joined Bitcoin in having a supply curve that is decreasing. The store-of-value is the first crypto, and the DeFi building block is the second.”

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