Ethereum Rocks To New Highs
Ethereum Hits New Landmark amid Deflationary Pressure
by Bogdan Giulvezan
Wednesday, November 3, Ethereum printed a fresh All-Time High at $4,668, successfully surpassing previous tops and establishing support at the key level of $4,500. The second-largest cryptocurrency by market cap has been on a bull run since late September, due in part to the network upgrades that take it closer to the transition to Ethereum 2.0 which is slated for 2022.
Ethereum just completed a straight week of negative or deflationary issuance, which increases demand and means that within the last 7 days, more ETH has been destroyed than has been mined. This burning feature has been introduced by the London fork back in August and since then, over $3.4 billion worth of ETH has been destroyed. The daily burn amount is approximately 15,000 ETH, which translates into more than $60 million at current prices.
Unlike Bitcoin, which has a supply cap of 21 million, Ethereum’s supply is not capped and currently, there are 118,214,417 ETH in circulation. However, once Ethereum 2.0 goes live, the general supply may be reduced by 2.0% a year, according to data from analytics firm Ultrasound. This may be another catalyst for soaring prices, on top of the switch from Proof-of-Work to Proof-of-Stake, which will lower the energy consumption of the network and possibly reduce fees.
Chart Analysis – ETH/USD
At press time, Ethereum’s market cap sits at $537,141,584,158, with a daily volume of $17,926,339,742, and is trading at 4,543 against the US Dollar, with a 5.17% gain over the last 7 days according to data from CoinMarketCap.
Last time we talked about Ethereum, we mentioned that $4,500 is an important landmark but also that the MACD lines are coming closer together, which indicates diminished momentum. Now that $4,500 has been surpassed, the pair seems to move back closer to it and Wednesday’s candle is a long-legged Doji, which is an indecision candle and yet another sign that bullish momentum may be taking a breather.
Adding to that is the fact that the RSI is still showing bearish divergence: price is making higher highs but the indicator is making lower highs. However, in ETH/USD’s case, the RSI is bouncing at the same upper level, which is a weaker form of divergence but it’s still a warning sign.
As long as the pair remains above $4,000, the bias is still bullish but it’s very likely to see a pullback below the $4,500 level, based on all the signs mentioned above and the overextension of price. Possible support is located in the $4,250 area, while resistance will be provided by the BRNs (big round numbers) above.
