Ethereum’s native token, ether (ETH), has the potential to register significant gains against bitcoin (BTC), with the ETH/BTC pair near annual highs.
Ether shows a classic bullish reversal pattern
Bullish signals come from a classic technical pattern known as the “reverse shoulder,” which develops when the price is through a triple low and below a common support level known as the “neckline.” The central hollow, or head, is deeper than the other two known as shoulders.
A reverse shoulder pattern resolves after the price crosses the neckline accompanied by an increase in trading volume. As a rule of technical analysis, his profit target is at a distance equal to the maximum distance between the lowest point of the head and the neck line.
So far, Ether has painted a similar pattern, and is now waiting to cross the neckline, as shown in the chart below.
If the ETH price climbs decisively above the neckline, then the token’s upside target in 2022 will be around 0.136 BTC, or about 60% upside to current price levels.
Enthusiasm Boosts ETH/BTC Pair Merger
This groundbreaking moment could come before Ethereum’s transition from proof of work (PoW) to proof of issue (PoS).
Although its proponents tout Merge as a less energy-intensive alternative to PoW, the update could reduce annual Ether issuance by 4.2%.
In addition, the demand for ETH to receive tokens that could be created as a result The Merger the ETH/BTC pair has increased by over 55% since the Merger was announced on July 14th.
Matt Hougan, Chief Investment Officer at Bitwise Asset Management, believes that Ethereum’s transition to a less energy-intensive protocol could boost its appeal to institutional investors. At the same time, it could allow ether to overtake bitcoin in terms of market capitalization.
Also Read: Ether Price May Decouple From Other Cryptocurrencies After Merger – Chains
“It’s entirely possible we’ll see ether dethrone bitcoin at some point in the future,” Hougan told Forbes, adding:
“It’s attacking, in my opinion, a bigger potential market”.
Currently, Ethereum’s market cap of $200 billion is lower than Bitcoin’s market cap of $369 billion.
Sell the news Merge?
On the other hand, ether is trading near a resistance zone with a long history of price rallies against bitcoin, Note the Riteable analyst. In addition, the current increase in the ETH/BTC pair is accompanied by reduced volumes and Relative Strength Index (RSI) indicators.
In other words, a bearish divergence that could mean the price rally in the ETH/BTC pair could be close to exhaustion, leading to a post-Merge correction.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of Cointelegraph.com. All investment and trading involves risk, you should do your own research before making a decision.