Ethereum ‘has to bounce’ as ETH bulls pin $5K rally hopes on critical support channel
Many analysts agree that the “dynamic support” could boost accumulation sentiment in the Ethereum market.
Ethereum’s native token Ether (ETH) could see yet another strong rebound in the sessions ahead as its price falls into a trading zone with a recent history of attracting buyers.
The rising trendline has been triggering ETH’s price rebounds since the beginning of October 2021 and comes as a part of a broader Ascending Channel range.
As a result, Ether’s path of least resistance has been to the upside despite pullbacks at the Channel’s upper trendline, with its quarter-to-date returns currently sitting at over 38%.
Most recently, the rising trendline was instrumental in limiting selloffs that followed the Ether price’s rally to a new record high above $4,870. That prompted analysts to expect another strong price rebound in the future, with a “swing long” setup posted by FOREXN1 on TradingView calling for a bull run to $5,000.
MacroCRG, a Twitter-based independent market analyst, said Ether “has to bounce” as it manages to hold the rising trendline as support following the latest price pullback.
Meanwhile, another analyst Pentoshi also anticipated a rebound but discussed the prospects of corrections below the rising trendline. Excerpts from his Nov. 12 tweet:
“I would love a 20-30% wipeout on alts. Usual bull run dip. Just bc I want it doesn’t mean it will happen. Greed to fear, please.”
Pentoshi’s downside target in the event of extended price correction was near $4,000, as shown in the chart below.
Macro fundamentals support ETH bulls
Ethereum’s ability to limit price corrections and — atop that — forming new highs appears to have more than just technical factors behind it.
Chris Weston, head of research at Pepperstone Financial Pty, cited fears of high inflation as the common denominator that has boosted demand for potential hedging assets across the crypto market, leading to Ether’s 500%-plus and Bitcoin’s 130%-plus price rallies in 2021.
To investors, “crypto is where the fast money is at,” Weston said in a note.
Additionally, last week, Mike McGlone, senior commodity strategist at Bloomberg Index, said he expects a $5,000 price for Ether, saying that investment “portfolios of some combination of gold and bonds appear increasingly naked without some Bitcoin and Ethereum joining the mix.”
Three #Crypto Musketeers Driving $3 Trillion Market Cap – Representing a better way to transact, a strengthening ecosystem and here-to-stay asset class, #cryptodollars are the most significant advancing part of the digital-money revolution and the third leg of the crypto stool. pic.twitter.com/qhEOXttPW8
— Mike McGlone (@mikemcglone11) November 9, 2021
The analyst cited declining supply as a major bullish backstop for Ether.
Namely, Ethereum’s software upgrade, dubbed “London Hard Fork,” in August implemented a code-change that started burning a portion of gas fees paid to miners via ETH, effectively reducing the supply.
Related: Ascending channel pattern and Ethereum options data back traders’ $5K ETH target
The upgrade has resulted in the removal of over 860,500 ETH tokens — now worth over $3.2 billion — since implementation, according to data provided by UltraSound.Money. At the current rate, the Ethereum network expects to burn 5.3 million ETH tokens every year versus 5.4 million issued.
McGlone noted that a declining supply rate would keep Ether on its bullish course against rising demand. Excerpts:
“Simply staying the course is the more likely outcome, as we see it. Ethereum has joined Bitcoin with a supply trajectory that is in decline by code. The first-born crypto is the store-of-value, and the No. 2 is the DeFi building block.”
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