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The cost of purchasing an Ethereum (ETH) token rose to its two-year high in the days leading up to its transformation into a proof-of-stake asset.
The ETH / USD exchange rate [almost] reached $ 600 on Monday after an upward move of 6.21%, the highest level since May 2018. Traders apprehensively raised their bullish bets on the pair after predicting a supply deficit in the Etherum market.
Ethereum 2.0
In retrospect, Ethereum plans to undergo a major network upgrade with the title of Ethereum 2.0. Technical progress will increase the scalability, energy efficiency and security of its blockchain without compromising its inherent decentralization.
Meanwhile, Ethereum 2.0 also proposes to change ETH as an asset. The update will mainly attribute three subclass attributes to the native token: that of capital goods, commodities and stores of value.
The Ethereum Foundation requires ETH users to participate in their holdings in a smart contract that will activate the ETH 2.0 mainnet. Overall, the contract requires 524,288 ETH tokens. In return, it will provide stakers with attractive annual returns.
As of Monday, the ETH 2.0 smart contract has raised about 50% of the expected amount. If they successfully earn 524,288 ETH by today, the team will launch ETH 2.0 on December 1st. Failure to collect the required number of Ethereum tokens will delay the launch.
The closer we get to 100% of the 524K threshold, the higher the price of $ ETH… pic.twitter.com/NO3uCVLoJU
– SpartanBlack (@ SpartanBlack_1) November 23, 2020
The increase in ETH deposits will remove a small portion of the tokens from circulation. The supply shortage, coupled with Ethereum’s rewards, could push more ETH holders to deposit their holdings in the ETH 2.0 smart contract. This somehow explains why ETH / USD is recovering to the upside.
“A steadily increasing report signals the community’s trust in ETH 2.0 and the fact that people are willing to forgo higher returns elsewhere to bet on Ethereum’s future,” explained a member of Spartan Group, an asset management platform focused on cryptography.
$ 832
Ethereum is practically watching a resistance-free zone as it watches further extension of its bullish momentum.
Ethereum is trading upwards towards $800. Source: ETHUSD on TradingView.com
The trade setup against support fundamentals looks like this: Ethereum is trading up within a Rising Wedge pattern; it pulls back by testing the upper trend line of the structure towards the lower trend line (a Short strategy), and bounces back to the upper trend line by testing the lower trend line as support (a Long strategy).
The uptrend continues until ETH / USD tests the Wedge apex, where the two trend lines converge. That level is roughly close to $ 832, a level that acted as a crucial resistance in April 2018. Upon testing it, ETH / USD would have burst to the downside, dropping to the height of the Wedge (~ $ 156).
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