Ether (ETH), the native cryptocurrency of the Ethereum network, has broken out from its previous downtrend and now shows potential to reach $3,000 according to a recently published price prediction.
Markus Thielen, the Head of Research at cryptocurrency financial services company Matrixport, shared an upbeat forecast stating that ETH could triple its current value if it maintains certain key support levels.
Introduction
Ethereum has become the most used blockchain network for decentralized applications (dApps), non-fungible tokens (NFTs), decentralized finance (DeFi) protocols, dao organizations, and more. The utility and adoption that powers the Ethereum network creates fundamental demand for its Ether token. As network activity and real-world usage continues growing, constraints on Ether's total supply helps provide the ingredients for significant price appreciation.
Key Takeaways:
- Ether is the native token of the Ethereum network
- Ethereum has massive adoption for dApps, NFTs, DeFi, etc
- Constrained Ether supply and growing network usage drives price
In a recent research analysis, Markus Thielen identified key support levels that if maintained, could propel Ether's price back towards its previous all-time high of ~$4,800 and beyond. Specifically, Thielen sees a rally to $3,000 as achievable if bulls can hold certain positions.
"As long as the price sustains above the support at $1,300 to $1,350, that opens up upside toward the next significant resistance zone between $3,000 to $3,300."
Current Market Conditions
Thus far into 2023, Ether's price action has been positive, especially when contrasted against the misery of broader macro asset markets. While the S&P 500 and Nasdaq 100 indices wallow in negative yearly performances, Ether clocks in with robust double-digit gains since the start of January.
Several dynamics help explain Ether's outperformance. For one, pressure from The Merge benefited ETH pricing. Transitioning Ethereum's consensus mechanism away from proof-of-work mining to proof-of-stake dramatically reduced the token's net issuance rate. By limiting incoming supply, merged Ethereum intensified competition amongst users to acquire the precious ETH required to participate in network activity.
Furthermore, institutional adoption and retail interest in ETH market exposure keeps growing. Major banks like JPMorgan and Citi also maintain bullish perspectives over the long-term.
In Thielen's view, Ether retains its robust bid due to a few key tailwinds:
ETH Price Drivers:
- Constrained token supply post-Merge
- Expanding institutional investment demand
- Growth in Ethereum network development & users
Analyzing Ether's Market Structure
On the supply-side, tracking the movements of long-term ETH holders provides valuable perspective into price outlooks. Generally, investors with multi-year holding periods tend to represent stronger hands less likely to sell.
Demand-side metrics also impress. Open interest in Ether futures continues establishing new all-time highs, suggesting accumulation amongst sophisticated traders. Additionally, the number of new Ethereum addresses joining the network grows at an incredible pace.
On-chain activity propels higher too as shown by daily transaction count and gas usage. In particular, non-zero gas usage relates directly to application demands. Its consistent uptrend demonstrates Ethereum's real-world utility.
Thielen also highlighted that from a technical perspective, Ether shows strength. Its current price consolidation since August behaves similarly to the sideways chop witnessed in mid-2016 when ETH traded between $12 and $21. Back then, breakout from that range preceded Ether's 2017 bull run towards ~$1,400.
Key Support Levels to Watch
According to Thielen's ETH analysis, maintaining positions above $1,300 to $1,350 stands critically important for additional upside. Losing that support zone could see prices revisit the 200-week moving average around $1,200 which would delay further advances.
If the $1,300 floor holds, Thielen's $3,000 target offers alluring potential. Hitting that level translates to over a 100% return from current prices. And history suggests far greater gains can build following decisive breakouts. For context, Ether's 2017 surge from ~$300 to ~$1,400 happened in just around 40 days once bullish momentum began accelerating.
ETH Key Supports:
- $1,300 -> Critical for maintaining upwards trajectory
- 200-week MA ($1,200) -> Backup support if $1,300 fails
Additionally, buyers must absorb the massive supply of ETH unlocked via staking following The Merge. Over 25% of total circulation currently locks up validator rewards. As that ETH enters circulation, it could weigh on upside momentum.
Nevertheless, Ethereum boasts real-utility that both institutional and retail users increasingly gravitate towards. Its network growth and token dynamics provide the backdrop where Thielen's $3,000 target looks achievable. For investors betting on Web3's mainstream emergence, buying ETH offers perhaps the most direct exposure towards that eventuality.