On September 3, Ethereum began to decline against Bitcoin and continued until around yesterday. After peaking in early September, Ethereum lost almost 25% in value compared to Bitcoin, leaving behind a trail of lower highs and lows, thereby forming a Descending Channel.
On October 23, the ETH/BTC exchange rate broke out of the Channel, creating expectations for a strong and prolonged recovery trend. However, yesterday’s selloff resulted in traders testing the Channel’s resistance trendline as support, Coin Telegraph reported.
Ethereum prices indicate divergence against ETH/BTC downtrend
The development of higher highs in ETH/BTC’s daily CCI (Commodity Channel Index) showed bullish divergence against the downtrend. CCI measures an asset’s variations from its statistical mean to identify the likelihood of a reversal.
Stefan Krecher, a Germany-based market strategist, commented:
A hidden divergence is always an indicator for a possible trend reversal. ETH/BTC may rebound in the coming sessions also as the pair’s daily relative strength index remains not overbought.
Krecher expected Ethereum to reach a monthly pivot of around 0.072 BTC, which is around 8% above the current levels. On the other hand, ETH/BTC risked finding itself in its range support trendline near 0.058 BTC by reentering the Descending Channel range.
Ethereum gained more than 2.6% on Monday, leading to a bullish price outlook. The second biggest crypto held $4,000. At the same time, Bitcoin lost over 3% after holding near $60,000. Due to this, the exchange rate between the coins appeared weaker because Ether’s rally against the dollar was weaker than Bitcoin’s.
Prospects look bullish
Ethereum’s prospects looked bullish nonetheless, as Coin Telegraph reported earlier. Ethereum showed price trend weakness at first with little trading volume. However, it broke out of the pattern on the daily timeframe. Currently, it is testing the Triangle’s upper trendline to confirm the bullish tendency. The Triangle setup target is around $6,500, so if Ether rebounds again, its price might top $4,300.
Ethereum supply on the decline
After the crypto’s London hard fork, Ether token supply is decreasing. With the update, the EIP-1559 improvement proposal went live. It began burning tokens that had been given to miners as payment earlier. Since the hard fork launched, Ethereum has destroyed ETH tokens worth almost $2.25 billion.
Over 8M ETH dropped from circulation
As the Ethereum 2.0 deposit contract drew more than 8 million ETH, this amount of tokens was taken out of circulation for at least a year. Institutional demand for Ether is on the rise. Ether holdings of regulated funds have increased from 2.43 million to 4.08 million ETH y/y.
