Cointelegraph Team
Cointelegraph
Ethereum’s native token, Ether (ETH), has been declining against its top crypto rival, Bitcoin (BTC), since Sept. 3.
Ether dropped in value against Bitcoin by almost 25% after topping out in September at 0.07955 BTC. As the top altcoin declined, it left behind a trail of lower highs and lower lows, thus forming an ascending channel.
Later, ETH/BTC broke the channel to the upside on Saturday, raising anticipations about a strong extended recovery trend. But a selloff on Sunday and the ongoing session had traders test the channel’s resistance trendline as support.
ETH price charts suggest bullish divergence
The sentiment raised Ether’s possibility to reenter the falling range as shown in the chart below.
ETH/BTC daily price chart featuring bullish divergence. Source: TradingView
At the same time, the formation of higher highs in ETH/BTC’s daily commodity channel index (CCI) showed hidden divergence against the pair’s downtrend. For the uninitiated, CCI is a momentum oscillator that measures an instrument’s variations from its statistical mean to spot potential reversals.
“A hidden divergence is always an indicator for a possible trend reversal,” noted Stefan Kircher, a Germany-based market strategist, adding that ETH/BTC may rebound in the coming sessions also as the pair’s daily relative strength index (RSI) remains “not overbought.”
Kircher anticipated Ether to hit its monthly pivot point around 0.071586 BTC, almost over 8% of the current levels. The upside target also coincided with the 0.618 Fib line (0.071505 BTC) of the Fibonacci retracement graph in the chart above.
On the flip side, reentering the descending channel range risked sending ETH/BTC to its range support trendline near 0.058238 BTC.
Ether price against the dollar
The bullish ETH/BTC price outlook appeared as Ether held $4,000 as solid support while rebounding over 2.6% Monday. Meanwhile, Bitcoin’s price retraced almost 3.5% after setting up a similarly strong price floor near $60,000.
As a result, ETH/BTC merely looked weaker because Bitcoin rallied strongly against the United States dollar than Ether. Nevertheless, the Ethereum token’s prospects looked bullish, as earlier reported by Cointelegraph, with the aid of an ascending triangle setup shown below.
ETH/USD daily price chart featuring ascending triangle setup. Source: TradingView
Ether broke out of the pattern on the daily timeframe but with little trading volume, showing weakness in the price trend.
The cryptocurrency now tests the triangle’s upper trendline as support for bullish confirmation. Should a rebound follow suit, the price could eye new record highs above $4,384, with the triangle setup’s target sitting near $6,500.
ETH supply crunch
Additionally, the supply of Ether tokens has been declining after the Ethereum network’s London hard fork. Namely, the Ethereum Improvement Proposal 1559, which went live with the update, started burning ETH that it previously paid to miners.
Data collected from WatchTheBurn shows that the Ethereum network has destroyed almost $2.25 billion worth of Ether tokens since the London hard fork’s launch.
Additionally, the Ethereum 2.0 deposit contract has attracted more than 8 million ETH, thereby removing them from circulation for at least a year.
Total value staked in Eth2 smart contract. Source: CryptoQuant
Moreover, regulated funds have increased their Ether holdings from 2.43 million ETH in November 2020 to 4.08 million ETH today, signifying increasing institutional demand.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.
Recommended Content
Editors’ Picks
VanEck sees Bitcoin reaching $61 trillion market cap, Marathon buys $100 million BTC
Bitcoin declined by 1% on Thursday following asset manager VanEck's forecast that the top digital asset will reach a $61 trillion market capitalization by 2050.
Ethereum Classic price sets for a rally following retest of key support
ETC edges higher by 2.3% and trades around $22.60 at the time of writing on Friday after testing a key support area the day before. On-chain data showing increased account growth suggests a bullish move ahead. Ethereum Classic price faced rejection by the daily resistance level of $25.13 earlier this week.
Celebrity meme coins lose their shine
Celebrity meme coins report by Jupiter Slorg on Thursday shows that these tokens have been in deep waters since early July after experiencing heavy growth in June. In a recent analysis, Jupiter Slorg revealed that celebrity meme coins are down by an average of 94% from their all-time highs.
Ripple gains 5%, Mark Cuban says Kamala Harris’ nomination could affect SEC lawsuit
Ripple (XRP) made a comeback above key psychological resistance early on Wednesday. Crypto traders are optimistic after the Ethereum Exchange Traded Fund (ETF) launch. Entrepreneur and investor Mark Cuban recently shared his comments on how Kamala Harris’ nomination to the Presidential elections could influence crypto regulation.
Bitcoin: Will BTC manage to recover from recent market turmoil?
Bitcoin recovers to $67,000 on Friday after finding support around $63,500 a day before. Still, BTC losses over 1.50% on the week as Mt. Gox persists in transferring Bitcoin to exchanges.