Why Ethereum’s price is perfectly positioned for a quick run-up to $4000

Ethereum price shows a bullish future after its breakout from the symmetrical triangle. Although optimistic, ETH needs to overcome a few hurdles before reaching to significant levels.

Ethereum price

Ethereum price action between 24 January and 27 March has led to the formation of a symmetrical triangle pattern. This technical setup consists of three lower highs and four higher lows which are connected using trend lines.

Track live crypto price of 10000+ coins!

Theoretical forecasting methods suggest this technical pattern could lead to a 34% move, obtained by measuring the distance between the initial swing points of the triangle. Adding this distance to the breakout point at $2,837 reveals the target as $3,818.

On 27 March, ETH produced a daily candlestick close above $2,837, indicating a breakout. Since then, the smart contract token has surged 22% but faces exhaustion of bulls. As a result, ETH has dropped 7% and is currently approaching the $3,077 to $3,197 demand zone. A bounce off this barrier is likely to trigger another leg-up, but this time around, ETH will retest the 200-day Simple Moving Average (SMA) at $3,489.

Since this hurdle is formidable, a successful flip could be the key to catalyzing a bull run to $3,833, the symmetrical triangle’s predicted target. In a highly bullish case, this move could tag the $4,000 psychological barrier, bringing the total run-up to 25%.

ETH Perpetual Futures | Source: Tradingview

The active deposits metric is an on-chain indicator that tracks the number of deposits to exchange wallets. A surge in this index is bearish for the underlying asset as it hints at the investors’ interest to sell their holdings.

Related:  LUNA Records 100% Growth In A Single Day. More Upside Coming?

For Ethereum, this on-chain indicator has been on a downtrend since November 2021 and has deteriorated from 22,800 active deposits to 205 as of this writing. This 95%+ decline in deposits indicates that ETH holders are optimistic about Ethereum price performance in the near future and are comfortable holding their tokens in cold wallets.

ETH active deposits chart | Source: Santiment

Further adding credence to the bullishness around Ethereum price is the 30-day Market Value to Realized Value (MVRV) model. This indicator is used to assess the average profit/loss of investors that purchased ETH tokens over the past month.

A negative value below -10% indicates that short-term holders are at a loss and is typically where long-term holders tend to accumulate. Therefore, a value below -10% is often referred to as an “opportunity zone.”

Since the MVRV is hovering around a local top at roughly 10%, a minor retracement seems likely as short-term holders panic sell. Interestingly, this pullback can be categorized as a bullish retracement due to the presence of the daily demand zone, ranging from $3,077 to $3,197.

MVRV Ratio | Source: Santiment

All in all, Ethereum price shows a bullish outlook and is backed by on-chain indicators, suggesting that a move to $4,000 is inevitable.

Download MAXBIT Android App, Your best source of all crypto news!

Google Play

Source link

Share this article: