The native token of Ethereum ie. Ether seems to be pitted against BItcoin with Ether logging in major gains. The native token might enter the breakout stage following the much anticipated “Merge”
Classic bullish reversal pattern displayed by Ether
The anticipation behind Ether following a bullish reversal pattern is due to the formation of a classic technical pattern which is known as “Inverse Heads and shoulders.” Such a pattern develops due to the price directly forming three troughs but below a common support level. This common support level is referred to as a “Neckline.” However the middle trough also known as the head is deeper than the other two troughs. The middle trough is therefore referred to as “Shoulders”
The inverse “Head and Shoulders” setup will directly resolve after the price breaks above the neckline. However it shall also accompany a phenomenal increase in the trading volume. The rule of this technical analysis is that the profit target should come at a length which should be equal to the maximum distance between the neckline and the head’s lowest point. The Ether token has been following this pattern however the token is currently awaiting a breakout above the neckline. If the Ether token follows this analysis the upside target of the token will be around 0.136 BTC. This approximate will directly result in a 60% rise from the ongoing price levels.
The “Merge” enthusiasm
The anticipated breakout moment might come at a time before the planned switch by Ethereum wherein the Proof of Work consensus mechanism will directly transition to a Proof of Stake mechanism. Although the “Merge” is supposed to be a less energy intensive alternative compared to the prior consensus mechanism the proposed update might also significantly reduce the annual issuance of Ether by 4.2%.
The overall demand for ETH has risen by an estimated 55% since the “Merge” was announced on July 14. The reason for this increase in demand is credited to the fact that ETH will also turn out as a means to receive any potential forked tokens.
The switch to such a less energy intensive protocol might also increase the likeability of Ether among various institutional investors present in the market. This points to the possibility that Ether might overtake Bitcoin in the near future in the aspect of market capitalization.
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