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ETH/BTC technical analysis points to 35% Ethereum gains

Ethereum gained good momentum after transitioning to a PoS, lifting its market dominance to 20%. Now it's breaking from ascending triangle in pair to BTC.

Ethereum, Bitcoin, Ethereum dominance, ETH vs BTC

Written by

Kevin Lopez
Published on

January 18, 2023

Key points: 

  • ETH is expected to increase by 35% this year to equal 0.1 BTC for the first time since 2018.
  • The Ethereum token is anticipated to surpass the ascending triangle pattern's horizontal resistance near 0.076 BTC.
  • Specifically, the ETH/BTC pair is expected to hit its next significant resistance in 2023, or 35% of the current price level.
  • ETH's market value has increased to nearly 20% of the total crypto market value in January 2023, from just over 10% in December 2020.
  • Ethereum network now generates fewer Ether tokens than are taken out of circulation, which theoretically makes Ethereum a "deflationary" asset.

Ether, the native token of Ethereum, is expected to increase by 35% this year to equal 0.1 BTC for the first time since 2018, the pattern would be a classic bullish continuation, and this would increase the value of Ether to 0.1 BTC.

Ethereum has to break through the resistance first 

Described as an ascending triangle, the pattern is formed when the price changes between ranges that are defined by support for the uptrend and resistance for the downtrend. It typically ends after the price reverses and departs from its previous course.

On a weekly chart, the ETH/BTC pair has been following an ascending pattern since May 2021. The Ethereum token is anticipated to surpass the pattern's horizontal resistance near 0.076 BTC. If this level is broken, the price could increase by as much as the triangle's maximum height. 

Specifically, the ETH/BTC pair is expected to hit its next significant resistance in 2023, or 35% of the current price level.

ETH/BTC 1W chart. Source - TradingViewETH/BTC 1W chart. Source - TradingView

However, it's important to note that ETH/BTC has attempted to break past the trendline's resistance in the 8-month triangle since May of 2021. The attempts included two major outbursts in November 2021 and September 2022, which saw the pairs recover 14% and 9%, respectively.

Both rallies failed to maintain a distance of 0.082-0.085 BTC, followed by severe price declines that pushed ETH/BTC back into the confines of the triangle. Given the long period of time that lies ahead, the pair is likely to face significant resistance in the range of 0.082-0.085 BTC, even if it surpasses the triangle. 

This would put ETH at risk of crashing toward the triangle's support, which is coincident with its 50-week exponential moving average (50-week EMA), which is represented by the red line in the chart above, it is approximately 0.070 BTC, this represents 6% loss from the current price. 

ETH becoming "deflationary"

The encouraging relationship between Ether and Bitcoin appears to have doubled the dominance of ETH over other crypto assets over the past few years. 

Notably, ETH's market value has increased to nearly 20% of the total crypto market value in January 2023, from just over 10% in December 2020, during the transition of the Ethereum network from PoW to PoS, the network launched a dedicated smart contract for staking.

ETH dominance 1W chart. Source - TradingViewETH dominance 1W chart. Source - TradingView

Becoming a PoS blockchain has led to two significant changes to Ethereum's economy. First, users temporarily delegate a portion of their Ether to the Ethereum PoS smart contract in order to receive a yield. Additionally, the Ethereum network has launched a burn mechanism for some transaction fees.

Both alterations have led to a reduction in the overall supply. As such, the Ethereum network now generates fewer Ether tokens than are taken out of circulation, which theoretically makes Ethereum a "deflationary" asset.

ETH supply after the Ethereum PoS merge. Source - UltraSound.MoneyETH supply after the Ethereum PoS merge. Source - UltraSound.Money

The price of ETH/BTC has increased by nearly 250% since December 2020 despite still having a loss of approximately 50% from its highest recorded levels in 2017. 


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