The exchange rate of the Ethereum for the dollar rose to 8.72 percent, to $ 740, the level last tested in May 2018. In the intraday period, the pair’s bullish move followed a correction Bitcoin, which on Sunday rose to a new record high of $ 28,377.
Thus, it appears that traders preferred to sell Bitcoin’s top to seek opportunities on Ethereum, whose idiosyncratic fundamentals, including the much-publicized update of the blockchain protocol for proof of participation, also pointed to a long-term bullish outlook. Some analysts agree that the Ethereum price could close above $ 1,000 next year.
In 2021 we begin seeing institutions buy $ ETH
Once you accept that Bitcoin may be valuable, it opens your mind to the possibility that other cryptoassets may also be valuable.
– Ryan Watkins (@RyanWatkins_) December 27, 2020
Ryan Watkins, senior research analyst at Messari – a data platform with a focus on cryptography, said that institutions could start buying Ethereum in 2021 as they explore profitable cryptography alternatives other than Bitcoin.
It is much easier to jump from BTC to ETH from there ”, he added.
Supply declines of Ethereum
The main foundation behind Ethereum’s wild bullish movements is the classic supply and demand model. Switching to proof of bet means that more people would block their ETH holdings in the Ethereum 2.0 smart contracts to obtain attractive annual percentage yields, thus removing a good supply from the market. And it seems that this is already happening after the protocol update at the beginning of December.
According to the Santiment data analysis platform, Ethereum’s balance on all crypto exchanges has dropped to a minimum of 1.5 years. This usually means that fewer traders are looking to exchange their holdings in ETH for other assets in the short term.
Meanwhile, Ethereum miners’ balances have also dropped to levels last seen two years ago. This indicates an increasing demand for cryptocurrencies in the over-the-counter and retail markets.
“Both are great validators,” commented Santiment.
The biggest bullish catalyst for Ethereum does not come from the US dollar, but from trades tied to bitcoin.
ETH / BTC traders expressed their belief in a medium-term upward trend, as the pair appears to have bottomed out on their longer-term charts. Traditionally, this signals the beginning of the so-called “altcoin season”, in which traders move out of their Bitcoin positions to seek profitability in alternative cryptocurrencies.
“Closed above the crucial limit of this range, indicating that further upward momentum [irá] occur, and another HL is created, ”noted Michaël van de Poppe, an independent market analyst, adding that it is a“ good sign ”for Ethereum.
Meanwhile, analyst Edward Morra detected a reverse head and shoulder pattern on the weekly ETH / BTC chart. He noted that the technically optimistic pattern could send the pair up by 150 percent.
Mr. Morra’s long-term target price for ETH / BTC is 0.05.