Ethereum: This Is Why ETH Is Likely to Outperform BTC
Bitcoin is making headlines at the moment, and it has become the talk of the town. A milestone event occurred on December 10 and this cryptocurrency gained some level of legitimacy as it began trading on the Chicago Board Options Exchange (CBOE). All this buzz is overshadowing the fact that Ethereum Coin, the second-largest cryptocurrency by market cap, is all set to make a substantial move toward higher prices. The kicker is that I believe ETH coin prices are going to considerably outperform Bitcoin going forward, effectively stealing the show.
All my views on cryptocurrencies have been generated using technical analysis, and this time is no different. Technical analysis is a method of investment analysis that involves analyzing the asset’s price chart to determine where the price is heading next. This method has served me very well, especially in the cryptocurrency space.
The Completed Pattern
The following Ethereum coin price chart illustrates the reason why I believe Ethereum is set to make a move toward higher prices.
Chart courtesy of TradingView.com
The technical pattern highlighted on this Ethereum price chart is a triangle. Triangle patterns are created when the asset’s price is characterized by a sequence containing lower highs and higher lows. This pattern is best identified using two converging trend lines, which are created by connecting the sequence of lower highs and higher lows. These trend lines define that pattern and act as respective levels of price support and price resistance.
When price breaks above resistance or falls below support, it indicates that the triangle pattern is complete and suggests that the asset’s price is going to proceed in that direction.
On November 23, the triangle pattern was completed when the ETH coin price exited this pattern by breaking above resistance, suggesting that higher prices are likely to prevail.
If I back up and take a longer-term approach to this ETH coin price chart, it illustrates that the triangle pattern is actually a consolidation wave, acting as a midpoint within a larger bullish trend.
The Larger Bullish Trend
The following Ethereum price chart illustrates the significance of the triangle consolidation wave.
Chart courtesy of TradingView.com
This ETH coin price chart illustrates a bullish trend that is constructive in nature.
Constructive price action contains two predominant waves: an impulse wave and a consolidation wave.
The impulse wave defines the period in a bullish trend where the asset makes a sustained move toward higher prices. Within in a bullish trend, this is where the gains are captured.
The consolidation wave defines the period in a bullish trend where the asset price refrains from advancing and instead, the gains from the previous impulse wave are digested by corrective price action. Corrective price action unwinds any overbought conditions that were created, in order to create the necessary environment where a new advancing impulse wave can develop.
The triangle pattern doubles as a consolidation wave and the breakout, which occurred on November 23, completed this wave. It suggests that a new impulse wave is now in development.
Ethereum Price Forecast
This wave structure can be used to create a potential price objective because the consolidation wave acts as a midpoint in the trend. Assuming this notion, the impulse wave that preceded it can be used to project where the prices are heading.
The log-based approach seems most applicable because cryptocurrencies have a tendency to make parabolic moves. Applying the log-based approach to the ETH price chart produces a price objective of $9,000. I know that such an objective seems insane to comprehend, but to keep things in perspective, earlier this year, ETH prices moved from $8.20 to $412.21, which means a move from $440.00 to $9,000 is not such a far stretch.
Now that I have established why I believe that Ethereum is set to move higher, I am going to outline why I believe Ethereum coin prices are set to outperform Bitcoin prices.
Bitcoin Versus Ethereum
This price chart illustrates the performance of Ethereum versus Bitcoin.
Chart courtesy of TradingView.com
The pattern highlighted on the price chart is an ascending channel and it is created using two upward-sloping parallel trend lines. These trend lines act as levels of price support and price resistance.
The slope of the pattern is suggesting that, over time, Ethereum coin is slowly catching up to Bitcoin.
For some reason in December, over the previous two years, Ethereum coin prices have bottomed versus Bitcoin prices. This event is apparent on the price chart because this is when support outlined by the ascending channel has been tested in the previous two years. Every time this event has occured, the price of Ethereum coin has gone on to stage a substantial move toward higher prices, where it has been outperforming Bitcoin prices.
If this correlation is going to continue, it suggests that Ethereum coin prices are set to make a substantial move. The substantial move is being supported by the previous two price charts I have provided. I have to believe that based on these indications, it is very likely that ETH prices are about to embark on an epic move toward higher prices, which will outperform the move in Bitcoin, going forward.
Analyst Take:
I am very bullish on the prospects of Ethereum coin prices going forward because I have reason to believe that ETH coin prices are about to embark on an epic move toward higher prices. This bullish view is based on the indications on the Ethereum price chart, and as long as the price action remains bullish, I will continue to support this view.
Source: Price Confidential
