Three market accelerators suggest that Ethereum’s native token Ether (ETH) is well-positioned to reach $4,000 this month.
Google searches for “Ethereum Merge” spike
Netizen interest in Ethereum’s upcoming network upgrade, dubbed “The Merge,” surged significantly in the week ending April 2, data from Google Trends shows.
Searches for the keyword “Ethereum Merge” achieved a perfect Google Trends score of 100 over a 12-month period, with most traffic coming from the US, Singapore, Canada, and Australia.
Internet trend score for the keyword “Ethereum Merge”. Source: Google Trends
Merge, also called ETH 2.0, refers to the complete transition of the Ethereum network from Proof-of-Work (PoW) to Proof-of-Stake (PoS), a development that has been credited as one of the key catalysts behind Ether’s recovery from $2,500 touted on March 14 to over $3,500 this week.
The optimistic outlook comes from Merge’s proposal to lower the issuance rate of Ether, which would lead to a potential supply spike in the total amount of ETH in circulation. With PoW mining, the supply of ETH has grown by 3% every year.
Total value used in ETH 2.0. Source: Glassnode
The surge in public interest in “Ethereum Merge” suggests that enthusiasm among crypto investors and traders is growing as the Ethereum upgrade approaches. Kiln’s launch last month is the final public testnet before the entire network transitions to PoS sometime this year.
Swap ETH reserves to three-year lows
At the same time, the downward trend in ETH supply on crypto exchanges continues.
Notably, net ether reserves across all exchanges have fallen to their lowest levels since August 2018, suggesting traders have been withdrawing ETH en masse to hold it for the long term or to stake it via DeFi liquidity pools.
Ethereum balances on exchanges. Source: Glassnode
Additionally, the number of addresses with a non-zero balance continues to rise, indicating increased adoption and adoption of ETH.
Ethereum count of non-zero balance addresses. Source: Glassnode
Technical data points to an ETH price of $4,000
The chances of ETH price hitting $4,000 in April are also boosted by a classic technical pattern.
Dubbed the “Symmetrical Triangle,” the pattern usually forms when price consolidates sideways after a strong up or down move within a range defined by a falling upper trendline and a rising lower trendline.
Ideally, after the price breaks, the triangle resolves in the direction of its previous trend and is considered a “continuation pattern”.
However, symmetric triangle breakouts do not necessarily lead to a continuation trend. For example, technical analysts Robert Edwards and John Magee, in their book Technical Analysis of Stock Trends, note that about 25% of all symmetrical triangle breakouts result in reversals, meaning price does not break in the direction of its previous trend and resists hence expectations.
Ethereum’s current breakout appears to be a reversal as it bounces higher instead of continuing its previous trend lower as illustrated in the chart below.
ETH/USD daily price chart with symmetrical triangle construction. Source: TradingView
The potential breakout target of a symmetrical triangle is calculated after measuring the maximum length between the upper and lower trend lines of the pattern and then adding the result to its breakout point.
This puts the ETH/USD bullish target near $4,000.
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