Three market catalysts indicate that Ethereum’s native token Ether (ETH), is well-positioned for reaching $4,000 this month.
Google searches spike for “Ethereum merger”
The interest of Internet users in Ethereum’s network upgrade, “the Merge”, has increased significantly in the week ended April 2, according to Google Trends’ data.
Google Trends scores of 100 were achieved for searches for “Ethereum merge” over a 12-month period. Most traffic came from Australia, Singapore, Canada and the U.S.
Internet trend score for keyword “Ethereum Merge”. Source: Google Trends
Merge (also known as ETH 2.0) refers to the Ethereum network’s complete transition to Proof-of-Stake from Proof-of-Work. This development was touted by many as one of the key catalysts behind Ether’s recent rebound rally — from almost $2,500 on March 14, to more than $3,500 this week.
Merge’s proposal that Ether’s issuance rate be reduced, which could lead to a supply peak in the total amount of ETH in circulation, is what has prompted the bullish outlook. ETH’s supply has increased by 3% each year thanks to PoW mining.
Total value staked on ETH 2.0. Source: Glassnode
As the Ethereum upgrade draws near, there has been a spike in interest in “Ethereum Merge”. This suggests that crypto traders and investors are becoming more interested in this topic. Kiln’s launch last month was the final public testnet before the entire network switches to PoS sometime in the next year.
$ETH We may see a move towards $4000 as soon as the price action stays above $3400. Likely a healthy retrace after a test of 4k Then into a aggressive move to new ATH’s for merge pic.twitter.com/ZDvReVPAWP
— Cactus (@thecryptocactus) April 5, 2022
Three-year low in Exchange ETH reserves
Nevertheless, the ETH supply decline trend on crypto exchanges is continuing.
It is notable that net Ether reserves across all exchanges have fallen to their lowest levels since august 2018, suggesting traders have been taking ETH out in large quantities to either hold them for long-term, or to stake them across DeFi liquidity pool.
Ethereum balance on exchanges. Source: Glassnode
Furthermore, addresses with a balance of at least zero continue to increase, indicating a growing adoption of ETH.
Number of Ethereum addresses that have a balance greater than zero. Source: Glassnode
Techs suggest a $4K price for ETH
A classic technical pattern can also boost the chances of ETH reaching $4,000 by April.
The “symmetrical triangle” is a pattern that occurs when the price consolidates sideways within a range defined as a falling upper trendline and rising lower trendline following a sharp move downside or upside.
The ideal scenario is that the triangle will resolve after price breaks in the previous trend direction. This is called a “continuation” pattern.
Related: Crypto Venture Capital Firms See Surging Assets Under Management
But, symmetrical triangular breakouts don’t always result in a continuation trend. Technical analysts Robert Edwards (and John Magee) note in their book Technical Analysis of Stock Trends that approximately 25% of all symmetrical triangular breakouts result in reversals. This means that the price doesn’t move in the same direction as its previous trend and thus defies expectations.
The current breakout of Ethereum appears to be a reverse, with it moving to the upside rather than continuing its downward trend as shown in this chart.
Daily price chart for ETH/USD featuring symmetrical triangle configuration. Source: TradingView
The potential breakout target for a symmetrical triangle is determined by measuring the length of the pattern’s upper or lower trendline, and then adding it to the breakout point.
The ETH/USD bullish target is now at almost $4,000.
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Eileen Wilson –Technology and Energy
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