On November 7, the price of Ethereum (ETH) rose to $464, while the price of Bitcoin (BTC) fell back to $15,500 after rising to around $15,900. Based on the strong momentum of Ethereum, traders expect greater gains in the short term.
There are three potential reasons why ETH may see a sharp rise in the next few weeks. The driving factors include: an optimistic high-time technical framework, favorable on-chain indicators, and the launch of ETH 2.0.
ETH higher time frame is bullish
In September, an anonymous trader and chart expert named “Crypto Capo” posted a weekly ETH chart on Twitter, outlining two possible scenarios.
The bearish situation shows that investors refused to accept the $360 support level, and there followed a sharp decline. The bullish situation shows that the 360 USD is confirmed as a support level and it is possible to rush towards 800 USD.
ETH/USD Weekly Chart Source: Crypto Capo, TradingView.com
When talking about the $360 support level, traders said:
“If this level remains the same, we will see $815 in the next few months.”
Since making this prediction, ETH has successfully held the $360 support level in the past two months. Currently, it is testing the $450 resistance level, which has been a great resistance zone in 2020.
When the main resistance level breaks, a breakthrough rise will occur quickly, which is why traders are more speculative in the price of ETH than in previous weeks.
Skew’s data also shows that since late October, ETH’s 24-hour futures trading volume has increased significantly. This shows that traders have identified $450 as an important level for ETH, and they are either defending or trying to break through this level.
ETH Futures Daily Trading Volume Source: Skew
In contrast, fewer ETH address holders are profitable
According to IntoTheBlock data, 75% of ETH addresses are currently profitable. In contrast, 98% of Bitcoin addresses are profitable.
Generally speaking, when investors make a large amount of unrealized profits, they are more likely to sell rather than sell when their investment is losing money. Therefore, compared with Bitcoin, the number of profitable addresses for ETH is much smaller, which is a positive indicator and supports the view that there is still room for continued growth.
ETH 2.0 is another bullish factor
ETH 2.0 is currently scheduled to be released on December 1, and some analysts speculate that this may cause a shortage of supply.
Under the ETH 2.0 mortgage system, users can mortgage 32 ETH, and in return, they will receive a 15% reward. The mortgage process means sending ETH to the ETH 2.0 contract address. During the mortgage period, users cannot use or transfer their ETH unless they choose to stop the mortgage.
If the number of mortgages increases, as it can generate stable returns with relatively low risks, this will cause the circulation of ETH to drop sharply, especially on exchanges.
Less ETH will be sold, and more ETH will be hoarded as users will gradually increase their holdings. This may generate greater demand for ETH and cause the price of ETH to remain above $450.
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