Ethereum price continues to consolidate after hitting a new all-time high, but is poised to take off.
- There are three main reasons why the supply of ETH is rapidly shrinking, which could lead to higher prices.
- The main technical pattern suggests that Ethereum is targeting the $6,300 mark.
- A bullish scenario is possible if the overall situation in the cryptocurrency and global markets is favorable.
Ethereum price consolidates after the second largest cryptocurrency on November 10 reached a new all-time high. Although ETH is moving sideways, several factors suggest that the token could be poised for a massive run-up.
Ethereum's circulating supply is decreasing at a rapid pace
Here are several factors that are currently limiting the total amount of Ethereum in circulation, which could continue to push up the price of ETH.
Over the past few years, Ethereum has become the leading protocol for developing smart contracts on its network. The vast majority of Ether is staked in smart contracts on the network, with nearly 27% of its supply reaching $143 billion or nearly 32,000,000 ETH. Of the 27% of coins hosted in smart contracts, 77% are locked in decentralized finance (DeFi).
ETH in smart contracts
Ether supply on exchanges is almost reaching a three-year low, a trend that began at the end of 2020. Only 12% of Ethereum's total supply is on exchanges, down from 17.3% at the start of the year. Low balances on exchanges suggest that investors are not planning to sell, which could reduce the liquidity and volatility of ETH.
ETH on exchanges
The actual amount of Ethereum in circulation is much lower than commonly believed. More than 50% of the total Ethereum supply has not been moved in over a year. Only 20% of the ETH supply has been recorded as active since October 1.
EIP-1550, which introduced the fee burn mechanism, removed more than 1 million ETH in circulation in just three months after its launch, resulting in the burning of almost 1% of total supply.
Ethereum price is set to continue rising
Both fundamental and technical characteristics of Ethereum point to an optimistic future.. Ethereum price formed a “cup and handle” pattern on the chart with a measured upward move of 58% towards $6,340 from the neckline of the main technical pattern. As long as Ethereum price remains above the neckline, the bullish outlook remains valid.
Indicator signals on the daily chart are turning bullish: RSI and MACD indicate recovery in the near future, and that a local bottom is possible passed.
The next hurdle that ETH needs to overcome is resistance at $4550, then it could then get stuck in the $4600-4800 zone before breaking through the psychological $5000 level.
The basis now is the $4300 support level, a demand zone that did very well in the last $4000-4150 dip, and a critical support level $4000.
A bullish scenario will become possible if the general situation in the cryptocurrency and world markets turns out to be favorable. The coronavirus has not gone away, and it is not yet known what problems the new strain will bring.
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According to ethereumnews.ru
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