Ethereum’s native token, Ether (ETH), looks poised to record a significant price gain against arch-rival Bitcoin (BTC) heading into early 2023.
61% chance of Ether breaking out against Bitcoin
Bullish cues mostly come from a classic technical setup known as the ‘cup and handle’ pattern. It forms when price shifts slightly downwards (handle) following a U-shaped recovery (cup), but all maintain a common resistance level (neckline).
Traditional analysts perceive the cup and handle as a bullish setup according to veteran Tom Bulkowski. warn That pattern consistently hits profit targets 61% of the time. Theoretically, the profit target of the Cup and Handle pattern is measured by adding the distance between its neckline and the lowest point to the neckline level.
A widely tracked pairing, the Ether-to-Bitcoin ratio (or ETH/BTC), roughly depicts a similar setup. The pair is currently waiting for a breakout above the neckline resistance level of around 0.079 BTC, as shown in the chart below.
As a result, a decisive breakout move above the 0.079 BTC cup and handle neckline could push the price of Ether to 0.123 BTC, or more than 50%, by early 2023.
Is it time to be bullish on ETH?
Ether’s strong interim fundamentals compared to Bitcoin make it even more likely to experience a 50% price increase in the future.
First of all, Ether’s annual supply rate dropped significantly in October. This is partly due to a fee-burning mechanism that removes a certain amount of ETH from permanent circulation, which he calls EIP-1559, whenever an on-chain transaction occurs.
As previously covered by Cointelegraph, social mining project XEN Crypto primarily boosted the number of on-chain Ethereum transactions in October, increasing the number of ETH burns.
Since the EIP-1559 update went live on Ethereum in August 2021, over 2.69 million ETH (approximately $8.65 billion) has gone out of circulation. Data from EthBurned.info.
It shows that the more congested the Ethereum network, the more likely it is to enter a “deflationary” mode. As such, the depleting ETH supply could be bullish if coin demand rises at the same time.
Additionally, Ethereum’s move to a proof-of-stake consensus mechanism via “merge” acted as a sucker for Ether supply. A contract for an annual yield.
The total supply held by Ethereum PoS smart contracts reached an all-time high of 14.61 million ETH on October 31st.
By contrast, Bitcoin, a proof-of-work (PoW) blockchain that requires miners to solve complex mathematical algorithms to earn rewards, faces constant selling pressure.
Related: Public Bitcoin Miner Hash Rates Soar — But Is Bitcoin Really Bearish?
In other words, Bitcoin and Ether have relatively high selling pressure.
ETH/BTC Needs to Break Range Resistance
Ether’s path to a 50% price rally against Bitcoin has one strong resistance area along the way that acts as a potential killer of joy for the bulls.
In more detail, the 0.07 BTC to 0.08 BTC range has been a strong resistance area since May 2021, as shown below. For example, the rebound that started after testing the above range as resistance in December 2021 resulted in a 45% price correction by mid-June 2022.
A similar pullback could see ETH test the 0.057-0.052 range as a key support target by the end of this year or early 2023.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. All investment and trading movements involve risk. You should do your own research when making a decision.
