Ethereum price technicals hint at 35% gains versus Bitcoin in 2023

Ethereum’s native token, Ether (ETH), could grow 35% against Bitcoin (BTC) this year, reaching 0.1 BTC for the first time since 2018. This is to form a classic bullish continuation pattern.

Ethereum Price Must Break Key Resistance First

Known as an ascending triangle, this pattern forms when the price moves within a range defined by the support of the uptrend line and the resistance of the horizontal trendline. It usually resolves after price breaks out in the direction of the previous trend.

On the weekly chart, the ETH/BTC pair has followed an upward pattern since May 2021. Ethereum Token is eyeing a breakout above the horizontal trendline resistance of the pattern near 0.0776 BTC. Breaking this level can cause the price to rise by the maximum height of the triangle.

In other words, the ETH/BTC pair could hit the next big resistance level at 0.1 BTC in 2023, or 35% from the current price level.

ETH/BTC weekly price chart.Source: Trading View

Nevertheless, it is important to mention that ETH/BTC has attempted to break out of the resistance trendline of the triangle eight times since May 2021. That attempt included his two big breakouts in November 2021 and September 2022, with the pair up 14% and 9%. Respectively.

Both gains faded within the 0.082 to 0.085 BTC area, followed by an extreme price correction that brought ETH/BTC back within the triangle range. The pair may face stiff resistance within the 0.082 to 0.085 BTC range.

Such a move risks ETH crashing towards the triangle support. This coincides with the 50-week exponential moving average (his 50-week EMA) represented by the red line in the chart above, near 0.070 BTC, down nearly 6% from now. price level.

The story of ETH “deflation”

Ether’s bullish setup over Bitcoin appears as ETH’s dominance has doubled over other crypto assets over the past few years.

Notably, ETH’s market capitalization has risen from around 10% in December 2020, when the Ethereum network began its transition, to around 20.5% of the total cryptocurrency market valuation in January 2023. From Proof of Work (PoW) to Proof of Stake (PoS) with the launch of a dedicated staking smart contract.

ETH.D weekly performance chart.Source: Trading View

Becoming a PoS blockchain brought two important changes to the Ethereum economy. First, a user temporarily locks a portion of her Ether holdings into her PoS smart contract on Ethereum to earn yield. And second, the Ethereum network has started to consume some of the transaction fees.

Related: Ethereum “Shark” Accumulation, Shanghai Hard Fork Hits $2,000 ETH Price

Both changes have deflationary effects on overall supply. As a result, the Ethereum network now regularly generates less Ether tokens than are taken out of circulation, theoretically making Ethereum a “deflationary” asset.

Change in ETH supply after Ethereum PoS upgrade in September 2022. Source: UltraSound.Money

The price of ETH/BTC is up nearly 250% since December 2020, despite being down about 50% from the all-time highs seen in 2017.

This article does not contain investment advice or recommendations. All investment and trading moves involve risk and readers should conduct their own research when making decisions.