A combination of technical, fundamental, and on-chain indicators shows that the price of ETH could rise further as the first quarter winds down.
Ethereum’s native token, Ether (ETH), could hit $3,000 in March, supported by a mix of short-term technical, fundamental, and on-chain catalysts.
ETH price paints a “Symmetrical Triangle”
Ironically, the first tentative bullish outlook for Ether comes from a bearish continuation pattern.
Notably, ETH’s more than 50% drop from its all-time high of around $4,650 on Dec 2, 2021, followed by the formation of a consolidation channel called the symmetrical triangle. Therefore, the Ethereum token has been fluctuating between a descending upper trend line and an ascending lower trend line since the beginning of this year.
The ETH/USD pair last retested the lower trend line of the triangle as support on Mar 14 near $2,500, following a sharp correction after finding sellers near the 20-day EMA. 20 days; the green wave in the chart above).
Since then, the price of ETH has rallied as much as 9.26%, closing above the 20-day EMA resistance on March 16 to reach almost $2,750.
A decisive bounce move, accompanied by a surge in trading volumes, could see Ether eye the upper trend line of the triangle as its next upside target near $3,000.
The Merge
On March 15, Ethereum developer Tim Beiko announced that he had successfully tested “Combination” on the Kiln testnet, sparking speculation that the protocol would completely switch from proof-of-work to proof-of-stake as of the second quarter of 2022.
The euphoria around the merge has acted as one of the main bullish prospects behind the growth of Ethereum since the introduction of its first consensus layer updates in December 2020.
Arcane Research noted in its latest weekly report that a total of 312,000 validators staked 10 million ETH on the merge smart contacts, also called Ethereum 2.0.
That equates to nearly $26 billion worth of Ether, more than 8% of its total circulating supply, now locked up. The prospects of more Ether going out of circulation, coupled with hopes of increased demand, have pushed its price up nearly 360% from its December 2020 low of around $525 year to date.
Lito Coen, founder of Crypto Testers, a product comparison platform, anticipates that the launch of the merge will reduce Ethereum’s daily issuance rate from 12,000 ETH per day to 1,280, noting that the “annual inflation of the network will drop from 4.3 % to 0.43%”: equivalent to three Bitcoin halvings.”
“And,” according to Cohen, “the 0.4% inflation figure is without taking into account the automatic ETH burn introduced by EIP-1559 ($5 billion burned since launch), taking into account the ETH burn, Ethereum will be deflationary.”
Positive Divergence between Earnings and Prices
A bullish divergence is also emerging between Ethereum’s daily active addresses (DAAs) and the price of ETH, according to data from analytics platform Santiment.
In particular, Ethereum’s DAA fell, but not as much as prices, which have fallen by around 35% in the last four months. That indicated that users continued to interact with the Ethereum network for reasons beyond speculation and trading.
“The divergence of ETH active directions remains in the area where prices historically rise,” Santiment noted.
“This is a vote of confidence in Ethereum and a statement that it is here to stay (and grow),” said Michael Pearl, COO of decentralized app developer Kirobo, adding that its growth in the decentralized finance space would increase the ETH price even beyond $3,000.
By Audy Castaneda
