Ethereum’s native token, Ether (ETH), could grow by 35% against Bitcoin (BTC) this year to reach 0.1 BTC for the first time since 2018 as it forms a classic bullish continuation pattern.
The price of Ethereum must break the key resistance first
Named an ascending triangle, the pattern is formed when price fluctuates within a range defined by trendline support and horizontal trendline resistance. It is usually decided after the price breaks in the direction of the previous trend.
On the weekly chart, the ETH/BTC pair has drawn an upward pattern since May 2021. The Ethereum token appears to be breaking out above the horizontal trend line resistance near 0.0776 BTC. Clear this level and then you can see the price rally with the maximum height of the triangle.
In other words, the ETH/BTC pair could reach the next major resistance level at 0.1 BTC in 2023, or 35% of the current price level.
However, it is important to mention that ETH/BTC has tried to break the triangular resistance trend line eight times since May 2021. These attempts included two major breakouts in November 2021 and September 2022, which made the pair rally 14% and 9%, respectively.
Both rallies fizzled out in the area of 0.082 to 0.085 BTC, followed by an extreme price correction that took ETH/BTC back to the triangle range. Given this multi-year hurdle, the pair may face stiff resistance in the range of 0.082 to 0.085 BTC, even if it breaks above the triangle.
Such a move would risk ETH crashing into triangular support, which coincides with the 50-week exponential moving average (50-week EMA), represented by the red line in the chart above, near 0.070 BTC, down almost 6% from today. price level.
ETH “deflates” the narrative
The bullish setup of Ether versus Bitcoin is seen as ETH’s dominance has doubled over other crypto assets in the past few years.
The market capitalization of ETH increased to almost 20.5% of the entire crypto market value in January 2023, from about 10% in December 2020, when the Ethereum network started the transition from proof-of-work (PoW) to proof-of- stake (PoS) with the launch of a dedicated staking smart contract.
So the PoS blockchain has brought two major changes to the Ethereum economy. First, users temporarily lock a portion of their Ether ownership into an Ethereum PoS smart contract to get results. And secondly, the Ethereum network has started to burn some transaction fees.
Related: Ethereum ‘shark’ accumulation, Shanghai hard fork provides $2K ETH price
Both changes have a deflationary effect on overall supply. As a result, the Ethereum network now regularly produces fewer Ether tokens than it takes out of circulation, which theoretically makes ETH a “deflationary” asset.
The price of ETH/BTC has risen almost 250% since December 2020 although it is still down about 50% from its 2017 high.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making decisions.