Will Ethereum Continue to Rise Against Bitcoin? ETH price technical hints at 60% gains ahead
Ethereum’s native token Ether (ETH) is showing the potential to log big gains against Bitcoin (BTC) with the ETH/BTC pair nearing annual highs.
Ether paints classic bullish reversal pattern
The bullish signals come from a classic technical pattern called an inverse head and shoulders, which develops when price forms three bottoms below a common support level known as the neck. The middle trough, or head, is deeper than the other two, called the shoulders.
An inverse head and shoulders setup resolves after price breaks above the neck while accompanying an increase in trading volume. As a rule of thumb for technical analysis, the profit target comes in a length equal to the maximum distance between the lowest point of the head and the neck.
So far, Ether has painted a similar pattern, and a breakout above the neck is now awaited, as illustrated in the chart below.
If ETH’s price climbs decisively above its neck, the Ethereum token’s upside target in 2022 will be around 0.136 BTC, up roughly 60% from current price levels.
Merger enthusiasm boosts ETH/BTC pair
The breakout moment may come ahead of Ethereum’s transition from proof-of-work (PoW) to proof-of-stake (PoS).
While the merger is touted by proponents as a less energy-intensive alternative to PoW, the update could also reduce Ether’s annual issuance by 4.2%.
In addition, demand for ETH as a means of receiving potential forked tokens after the merger has seen the ETH/BTC pair increase by more than 55% since the merger’s release announcement on July 14.
Matt Hougan, chief investment officer at Bitwise Asset Management, believes that Ether’s switch to a less energy-intensive protocol could increase its appeal among institutional investors. In turn, it could ensure that Ether overtakes Bitcoin in market value.
Related: Ether price can be “decoupled” from other crypto records Merge – Chainalysis
“It’s entirely possible that we will see Ethereum overturn Bitcoin at some point in the future,” Hougan told Forbes, adding:
“It’s going after, in my view, a larger addressable market.”
For now, Ethereum’s $200 billion market cap trails Bitcoin’s $369 billion.
Sell the Merge news?
On the flip side, Ether has been trading near a resistance area with a long history of grueling price rallies against Bitcoin, notes analyst Riteable. In addition, ETH/BTC’s ongoing uptrend follows falling volume and relative strength index (RSI) readings.
In other words, a bearish divergence that could mean ETH/BTC’s price rally could be nearing exhaustion, resulting in a post-consolidation correction.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trade involves risk, you should do your own research when making a decision.
