A variety of technical, fundamental and on-chain indicators show that the price of Ethereum could soar higher before the end of Q1.
Ethereum’s native token, Ether (ETH), could hit $3,000 in March, backed by a mix of short-term technical, fundamental and on.
ETH’s price paints “symmetrical triangle”
The first of two bullish outlooks for the price of Ether (ETH) is coming from a bear.
Noteably, ETH’s 50% drop from its all time high $4,650 on December 2, 2021, followed up with forming a consolidation channel called a symmetrical triangle. Thus, the Ethereum token has been fluctuating between a falling upper trendline and a rising lower trendline since the beginning of this year.
ETH has dropped below the lower trendline (the purple line in the chart above) to the 20 day exponential moving average (20-EMA). This is a common sign of reversal. The support level is around $2,500 on March 14.
After its massive fall, Ethereum has been bouncing back, with the cryptocurrency now valued at nearly $2,750.
A decisive rebound move, accompanied by a rise in trading volumes, could be an Ether sign for a new upward leg that can potentially end at the triangle’s upper trendline near $3,000.
On March 15, Ethereum developer Tim Beiko announced that they have successfully tested the “Merge” on the Kiln testnet, raising speculation that the protocol will completely switch from proof-of-work to proof-of-stake in Q2/2020.
The euphoria around the merge has acted as one of the main bullish prospects for Ethereum’s growth since the introduction of its first consensus layer upgrades in December 2020.
The recent report noted that a total of 312,000 Ethereum validators have staked 10 million ETH on the Merge smart contract. This contract is what will ultimately launch the new version of Ethereum.
That amount to nearly $26B worth of Ether locked away, more than 8% of its total circulating supply now, and the prospects of more Ether going out of circulation coupled with hopes of higher demand has pushed the value of Ether up by nearly 300% from its December 2020 low of around $525 to today.
Lito Coen, founder of Crypto Testers — a product comparison platform — anticipates the Merge’s launch to have Ethereum’s daily emission rate slashed from 12,000 ETH per day to 1,280, noting that the network’s “yearly inflation will go down from 4.3% to 0.43%” — equivalent of three Bitcoin halvings.
“And the 0.4% inflation figure is without taking into account the automated ETH burn introduced by EIP-1559 ($5b burnt since launch) taking ETH burn into account Ethereum will be deflationary,” Coen wrote.
Positive divergence between utility and prices
A bullish divergence between Ethereum’s (ETH) DAAs and ETH price is emerging, according to data from analytics platform Santiment.
Notably, the ETH’s DAA fell in value but not as much as the price of Ether, which fell approximately 35% over the past 4 months. This meant that users continued to interact with the Ethereum network for reasons besides speculation and trading.
”ETH active addresses divergence remains in the area where prices historically rise,” noted Santiment.
“This is a vote of confidence in Ethereum and a statement that it’s here to stay (and grow),” said Michael Pearl, chief operating officer of decentralized application developer Kirobo, adding that its growth in the decentralized finance space would boost ETH’s price even beyond $3,000.
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