Ethereum’s local token, Ether (ETH), is expected to double its market value in the coming months, thanks to a combination of helpful technical and basic indicators.
Ether prices rose more than 9% on October 1, hitting about $ 3,300 for the first time in 10 days. Its gains initially rose in the wake of rising prices of all the top cryptocurrencies, including Bitcoin (BTC), which rose 9.5% to $ 48,000, its highest level in 10 days.
The ether-bitcoin correlation against US inflation
The October 1 crypto market boom coincided with the release of a report by the U.S. Department of Commerce on consumer spending.
The data show that the U.S. core personal spending spending price index, the Federal Reserve’s preferred measure of inflation, rose 0.3% in August and rose 3.6% year-on-year. Thus, core inflation has reached its highest level in 30 years.
Speculators consider Bitcoin to be a hedge against inflation, which explains the latest reaction of consumers to the high-value benchmark cryptocurrency in the United States.
Meanwhile, according to Cryptowatch, Ether’s 30-day moving average relationship with Bitcoin is close to 0.89, leaving ETH almost locked in a lockstep with BTC.
A University of Michigan survey conducted between August 25 and September 27 found that long-term inflation expectations among U.S. consumers rose 3%, the highest in a decade.
The result contradicted the opinion of Federal Reserve Chairman Jerome Powell, who described rising inflation for months as “temporary” but acknowledged in a recent Senate hearing that consumer prices could remain high for at least the next year.
As a result, inflationary pressures have led cryptocurrencies to keep Bitcoin as the ultimate hedge, with Michael Stiller, chief executive of MicroStrategy, suggesting that corporations convert their cash-based treasuries into BTC.
Cash and credit become depleted liabilities in the presence of massive inflation. Convert your balance sheet # Bitcoin To turn liabilities into assets. https://t.co/kzCEPDA4S2
– Michael Saylor (@Michael_Saylor) October 1, 2021
The micro-strategy carries about 0.5% of the total bitcoin supply, currently more than 6 6 billion.
Squeeze the supply
Etherium went through a network hard fork upgrade on August 5 that further enhanced the bullish outlook for Ether due to the classic law of supply and demand.
Dubbed the London Hard Fork, the upgrade introduces an improvement protocol, EIP-1559, which initiates the burning of a portion of Ethereum’s network fee, called the base fee. So far, activation of EIP-1559 has removed 410,404 ETH (about 32 1.32 billion) from active supply, according to Watch the Burn.
Etherium is preparing to turn its sensory process from Proof-of-Work (POW) to Proof-of-Steak (POS). As a result, it has launched a stacking pool that will allow users to earn rewards and increase their ETH holdings if they lock in 32 ETH Official PoS Smart Deals for a certain period of time.
So far, the amount of ETH deposited in the Ethereum 2.0 stacking agreement has increased from about 11,500 in November 2020 to 7.82 million ETH today. That said, the conversion effectively removed 7.82 million ETHs from operations.
On the other hand, the total amount of ether tokens held across all crypto exchanges has fallen to record lows. Data from CryptoQuant shows that exchanges now hold 18.1 million ETH, up from 23.73 million ETH a year ago.
Declining ETH reserves show that traders may want to retain their ether tokens instead of selling them for other assets, as supply for investors willing to enter the ether market may shrink, making ETH more valuable.
With EIP 1559 # Etherium Supply will probably be close to 120 million, after which it will go up and down and down, meanwhile demand will increase. It is fairly certain that this means that the number will increase.
– Lark Davis (@TheCryptoLark) September 24, 2021
Cups and handles
The combination of low supply and high demand serves as a bullish backstop for ether prices. Meanwhile, more evidence for an inverted breakout comes from a cup and Ether manages the pattern on long-term charts.
Related: Ethereum Bears score 3 30 million towards the end of Friday’s weekly ETH option
The cup and handle have a bullish continuity pattern, a round bottom and a landing channel setup, as shown in the chart below. The profit target of the structure is usually the length equal to the maximum height of the cup.
Considering that the cup’s resistance level is close to $ 4,000, a breakout ETH from there could send it above $ 6,000, which is almost double its current price.
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