Will Ethereum keep rallying versus Bitcoin? ETH price technicals hint at 60% gains ahead
Ethereum's native token Ether (ETH) shows the potential to log major gains versus Bitcoin (BTC) with the ETH/BTC pair nearing yearly highs.
The bullish cues come from a classic technical pattern called the inverse head and shoulders, which develops when the price forms three troughs below a common support level known as neckline. The middle trough, or head, is deeper than the other two, called the shoulders.
An inverse head and shoulders setup resolves after the price breaks above the neckline while accompanying an increase in trading volume. As a rule of technical analysis, its profit target comes at a length equal to the maximum distance between the head's lowest point and the neckline.
So far, Ether has painted a similar pattern, and it now awaits breakout above the neckline, as illustrated in the chart below.
If ETH's price climbs decisively above the neckline, then the Ethereum token's upside target in 2022 will be around 0.136 BTC, up approximately 60% from current price levels.
The breakout moment could come ahead of Ethereum's switch from proof-of-work (PoW) to proof-of-stake (PoS).
While the Merge is touted by proponents as a less energy-intensive alternative to PoW, the update could also reduce Ether's annual issuance by 4.2%.
Moreover, the demand for ETH as the means to receive any potential forked tokens following the Merge has seen the ETH/BTC pair rise by more than 55% since the Merge's release announcement on July 14.
Matt Hougan, chief investment officer at Bitwise Asset Management, believes Ether's switch to a less energy-intensive protocol could boost its appeal among institutional investors. In turn, it could ensure Ether overtakes Bitcoin by market capitalization.
Related: Ether price could ‘decouple’
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