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Bitcoin price sell-off continues, but data highlights need for healthy correction

Bitcoin price opened the week with a sharp sell-off, but on-chain and technical data points to a much-needed cooling-off period.

Bitcoin price is down 5% over the last 24 hours to trade at $41,645 on Dec. 11. Despite the sharp price correction, technical indicators and on-chain data show that Bitcoin (BTC) still displays strength as bulls strive to push the price back above $44,000.

Bitcoin dropped as much as 7.2%, falling to $40,300 on Coinbase, triggering a conversation among analysts. Julio Moreno, head of research at on-chain analytics firm CryptoQuant, said that the flagship cryptocurrency’s price was “overheating after the recent rally above” the $40,000 psychological level.

More data from on-chain data analysis firm Lookintobitcoin highlighted exhaustion among bulls. According to its December 2023 report, Bitcoin’s price has reached its golden ratio multiplier near-term target, highlighted by the Crosby Ratio, which shows Bitcoin’s near-term price at “over-extended levels,” resulting in the need to correct, or at least slow down.

MicroStrategy’s stock price more than doubles in 2023 in lockstep with Bitcoin

Bank of America and Fidelity have increased their MicroStrategy exposure in what appears to be a passive Bitcoin investment.

MicroStrategy’s bold Bitcoin (BTC) investment strategy is playing out profitably so far into 2023.

Today, MicroStrategy’s stock, MSTR, is up roughly 140% year-to-date (YTD) to $350 per share, its highest level since September last year. It mirrored Bitcoin’s 90% YTD gains, maintaining a strong positive correlation with the top cryptocurrency.

*MSTR daily price chart featuring its daily correlation with BTC. Source: TradingView*

Proxy Bitcoin investment boom

To recap, MicroStrategy is essentially a proxy for direct BTC investment without a spot Bitcoin exchange-traded fund (ETF) in the United States. It holds 140,000 BTC worth $4.26 billion, the most by a publicly traded company as a part of its treasury strategy.

MSTR investors typically get their buying or selling cues from the same catalysts that drive Bitcoin market trends.

As a result, the stock has mirrored the BTC price uptrend so far in 2023, led by rush-to-safety trades amid the U.S. banking crisis and anticipation that the Federal Reserve would stop hiking rates.

*BTC/USD daily price chart. Source: TradingView*

For instance, CNN data shows Bank of America’s entities owns 86,147 MSTR shares. Similarly, Fidelity purchased 97,199 MSTR shares throughout 2022, suggesting growing institutional interest in proxy Bitcoin investments.

Coinbase’s COIN, another stock offering indirect crypto exposure, has doubled in value this year as well.

MicroStrategy’s core business is unhealthy

MicroStrategy is essentially an enterprise software solution company and generates its revenue from software licensing and subscription services.

The firm realized a net loss of $193.7 million during Q4 2022, up from $137.5 million a year ago, led by a Bitcoin impairment loss of $197.6 million. Furthermore, its operating cash flow was $18.2 million compared to a positive cash flow of $3.2 million in the same quarter a year ago.

Revenue isn’t what you’re making it out to be. If a lemonade stand does $100M in revenue and spends $99,999,999 to generate that revenue, then a $1.00 profit isn’t all that amazing.

Microstrategy isnt far from that example. Their expense to generate that revenue leaves them with… pic.twitter.com/ZhA80tWn3J

— Alby (@albyva) April 2, 2023

Of course, MicroStrategy could sell its Bitcoin holdings to boost its balance sheet reserves. But the company said it would not alter its BTC buying strategy under financial stress. Instead, it employs strategies like share dilutions and debt offerings to raise capital to buy BTC.

“The risk here will come from its inability to buy Bitcoin with positive cash flows in future quarters as per its strategy,” said Pacifica Yield, a financial blogger at Seeking Alpha, adding:

“Dilution to buy assets that you lose money on if Bitcoin returns to its near-term lows would not be a shareholder-friendly strategy.”

20% correction for MSTR stock in Q2?

From a technical standpoint, MSTR has a high probability of a 20% price correction in Q2.

The stock’s yearly rally has landed its price near a resistance range — between $320 and $340 — notorious for capping breakout attempts. Suppose a pullback occurs, the price could drop toward its 50-3D exponential moving average (50-3D EMA; the red wave) below $260 by June.

*MSTR 3-day price chart. Source: TradingView*

MicroStrategy is expected to release its Q1 earnings report by May 2.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Tesla selling Bitcoin last year turned out to be a $500M mistake

Tesla’s remaining Bitcoin stash has grown 100% from its November 2022 lows, demonstrating that hodling BTC can indeed pay off.

The price of Bitcoin (BTC) has grown by more than 50% since Tesla unveiled its approximately $1-billion BTC sales in July 2022. In other words, the Elon Musk-owned electric carmaker would have made an additional $500 million if it had waited until today to sell.

Are Tesla’s Bitcoin trades profitable?

Tesla infamously dumped nearly $936 million of its total Bitcoin holdings in Q2 2022, accounting for 75% of its remaining reserves, to secure $64 million in profit. At the time, Bitcoin was trading about 70% lower than its record high of $69,000 in November 2021.

*BTC/USD monthly price chart featuring Tesla’s Bitcoin sales purchases and sales. Source: TradingView*

Originally, Tesla purchased $1.5 billion worth of Bitcoin in February 2021 at an average price of $36,000. The company then sold BTC worth $272 million to boost its Q1 2021 accounting by $101 million.

The company has nevertheless held on to its remaining BTC as of Q4 2022 despite the price of Bitcoin sitting at bear-market lows of around $16,000 at the time. Today, Tesla holds 10,725 BTC worth around $330 million, almost 15% below the procurement value from February 2021.

Overall, Tesla made roughly $165 million in profit from two separate Bitcoin sales. As of April 14, it sits atop an unrealized loss of around $56.6 million on its remaining BTC holdings, while its net profit to date sits at around $108 million.

Will Tesla dump its remaining BTC holdings?

Interestingly, Tesla’s previous Bitcoin sales came from weaker free cash flows. For instance, the Q1 2021’s BTC sale worth $272 million made up nearly 93% of Tesla’s free cash flows in the same quarter.

*Tesla free cash flows performance by quarter. Source: Statista*

Similarly, Tesla’s Bitcoin sales in Q2 2022 came as its free cash flows declined 73% versus the previous quarter. Both sales suggest that Musk relied on Bitcoin as a haven during Tesla’s cash crunch phases.

The Tesla CEO explained at the time that the sale was made to “prove liquidity of Bitcoin as an alternative to holding cash on a balance sheet.”

Meanwhile, Wall Street analysts estimate that Tesla’s free cash flow in Q1 2023 could be nearly $2 billion, up 40% versus the previous quarter. This should reduce the chances of Tesla dumping any significant Bitcoin amount in the near term.

Magazine: Bitcoin in Senegal: Why is this African country using BTC?

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Ethereum price retests key support level that preceded 60% gains in June 2022

Ether funds have witnessed inflows worth only $600,000 in the week ending April 7 compared to Bitcoin’s $56 million.

Ethereum’s Ether (ETH) token continued its losing streak versus Bitcoin (BTC) for the fifth day in a row as BTC’s price jumped above $30,000 for the first time since June 2022.

ETH/BTC bullish reversal fails midway

On April 11, the ETH/BTC pair dropped nearly 1.6% to 0.0634 BTC to retest multi-month lows.

*ETH/BTC daily price chart. Source: TradingView*

The ETH/BTC level is down 6.75% from its local peak of 0.0679 BTC set six days ago. It is also just 2% above the pair’s local low of 0.0622 BTC from March 20, showing that Ether’s bullish reversal attempt versus Bitcoin is near failure.

Interestingly, institutional interest also appears to gravitate more toward Bitcoin than Ethereum, according to CoinShares’ weekly report. It shows that the Bitcoin-focused investment funds witnessed inflows worth $56 million in the week ending April 7.

*Net flows into crypto funds in the week ending April 7. Source: CoinShares*

In comparison, the Ethereum-based funds received only $600,000 despite the hype around its long-awaited Shanghai hard fork on April 12.

Another ETH price rebound attempt ahead?

ETH/BTC’s ongoing decline has prompted it to retest its multi-month ascending trendline support (buy zone) near 0.0635 BTC for a potential price rebound toward its descending trendline resistance (sell zone) near 0.0750 BTC.

In other words, it will have been a 16.5% price rally by June, as covered in previous analysis.

*ETH/BTC three-day price chart. Source: TradingView*

The bullish reversal outlook takes cues from ETH/BTC’s price rebound in July 2022 after testing the same ascending trendline as support. Notably, the pair rose by about 60% to reach the descending trendline resistance near 0.0856 BTC.

Conversely, a decisive break below the ascending trendline support would raise ETH/BTC’s possibility to eye its 200-week exponential moving average (200-week EMA; the blue wave) near 0.0563 BTC, down about 10% from current price levels.

*ETH/BTC weekly price chart. Source: TradingView*

Like the ascending trendline support, the 200-week EMA was instrumental in stopping Ether’s price decline versus Bitcoin in July 2022. This makes it the most probable downside target in the coming months.

Magazine: ‘Account abstraction’ supercharges Ethereum wallets: Dummies guide

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Historical Bitcoin price fractal hints at rally toward $50K

Bitcoin’s price in 2023 is mirroring a 2015 fractal that saw BTC price doubling from $350 to $700 in seven months.

Bitcoin (BTC) could rally toward $50,000 in 2023, according to a historical price fractal highlighted by popular market analyst Mags.

Bitcoin price trend in 2015 vs. 2023

The chart fractal highlights the similarities between Bitcoin’s ongoing price trends and those recorded after the completion of the 2013–2015 bear market.

That includes Bitcoin’s consolidation inside the $200–$300 range between January 2015 and August 2015, which appears identical to its consolidation between the $18,500–$25,000 range after the supposed completion of its 2021–2022 bear market.

*BTC/USD price performance comparison between 2015 and 2023. Source: TradingView/Mags*

BTC’s price broke above the $16,000–$25,000 range in March 2023, prompting Mags to highlight its resemblance to the breakout above the $200–$300 range in October 2015.

Since this resulted in a rally toward $700 in June 2016, the analyst sees the scenario potentially repeating in 2023, with BTC’s price doubling to $50,000.

“Being bearish here [when Bitcoin’s price is around $28,000] is like being bearish at $350,” Mags added.

Liquidity crunch may spoil Bitcoin price rally

The bullish argument for Bitcoin comes amid anticipations that the United States Federal Reserve would slow the pace of its interest rate hikes.

Due to lower rate expectations, the yield on the benchmark U.S. 10-year Treasury note has declined. That, in turn, has boosted investors’ appetite for zero-yielding assets, such as Bitcoin and gold.

*U.S. 10-year weekly chart versus BTC/USD and XAU/USD. Source: TradingView*

In addition, lower yields have also sapped U.S. dollar demand, with the dollar losing 1.33% in 2023 versus a basket of top foreign currencies. Since Bitcoin’s value is largely denominated in the dollar, it means higher prices for BTC/USD.

However, Bloomberg analyst Mike McGlone has cautioned about a potential bull trap in the Bitcoin market due to a mounting liquidity crunch.

He said:

“It may be illogical to expect the stock market, crude oil, copper, and the Bloomberg Galaxy Crypto Index (BGCI) sustain the recent bounces with year-over-year measures of money supply and commercial bank deposits falling around 2%.”

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Ethereum vs. Bitcoin: ETH price risks 20% drop if key support level breaks

ETH’s price has repeatedly failed to break above key trendline resistance, and now Ethereum risks losing strong technical support as well.

Ether’s (ETH) rally versus Bitcoin (BTC) is not only showing signs of exhaustion but is also in danger of breaking below a key technical support level.

ETH slides vs. BTC in the second half of January

The ETH/BTC pair declined nearly 9.25% on Jan. 24 from its local top of 0.0779 BTC established on Jan. 11. Since the start of the year, Bitcoin has been slightly outpacing Ether in terms of United States dollars, rising 38% versus 35%, respectively.

*ETH/BTC daily candle price chart. Source: TradingView*

Interestingly, Ether’s pullback versus Bitcoin has landed its price at the bottom of its EMA ribbon range, as shown below.

*ETH/BTC weekly candle price chart. Source: TradingView*

The EMA ribbon indicator shows numerous exponential moving averages of increasing timeframe on the same price chart. Dropping below the ribbon range increases an asset’s likelihood of seeing an extended down-move.

In other words, breaking lower would increase its possibility of declining by more than 20% from its current price levels.

Conversely, rising above the ribbon range raises the asset’s chances of a broader rally.

Ether’s price capped by key descending trendline

This week, ETH/BTC dropped to the 55-week exponential moving average (the red wave) — a bottom wave — of its EMA ribbon indicator, as shown below. Buyers took control near the 55-week EMA, prompting Ether to recover a mere 0.35% versus Bitcoin to 0.0708 BTC on Jan. 24.

But now, the likelihood of retesting the EMA ribbon bottom is high due to a multi-month descending trendline resistance (black trendline in the chart below), where sellers have been more active as of late.

*ETH/BTC weekly price chart focusing on descending trendline resistance. Source: TradingView*

Therefore, one cannot rule out the possibility of ETH/BTC breaking below the EMA ribbon range, similar to how the pair did in May 2022 in the wake of the Terra collapse.

Back then, Ether fell by over 25% versus Bitcoin to 0.0490, a level coinciding with its 200-week EMA (the blue wave).

Therefore, if a similar breakdown occurs in the coming weeks, the ETH/BTC pair may test the 200-week EMA near 0.0550 BTC as its primary downside target, or roughly a 20% price drop from current levels.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Ethereum price technicals hint at 35% gains versus Bitcoin in 2023

Ethereum market dominance has doubled since the lunch of its staking contract in December 2020 as ETH price eyes levels not seen in five years versus Bitcoin.

Ethereum’s native token, Ether (ETH), could grow by 35% versus Bitcoin (BTC) this year to hit 0.1 BTC for the first time since 2018 as it forms a classic bullish continuation pattern.

Ethereum price must first break key resistance

Dubbed an ascending triangle , the pattern forms when the price fluctuates inside a range defined by rising trendline support and horizontal trendline resistance. It typically resolves after the price breaks out in the direction of its previous trend.

On a weekly chart, the ETH/BTC pair has been painting an ascending pattern since May 2021. The Ethereum token eyes a breakout above the pattern’s horizontal trendline resistance near 0.0776 BTC. Breaking this level could then see the price rally by as much as the triangle’s maximum height.

In other words, the ETH/BTC pair could reach the next big resistance level at 0.1 BTC in 2023, or 35% from the current price levels.

Nonetheless, it is important to mention that ETH/BTC has attempted to break above the triangle’s resistance trendline eight times since May 2021. The attempts included two major breakouts in November 2021 and September 2022, which saw the pair rallying 14% and 9%, respectively.

Both rallies fizzled out inside the 0.082 to 0.085 BTC area, followed by extreme price corrections that took ETH/BTC back inside the triangle range. Given this multi-year hurdle, the pair could face stiff resistance inside the 0.082 to 0.085 BTC range, even if it breaks above the triangle.

Such a move would risk crashing ETH toward the triangle support, which coincides with its 50-week exponential moving average (50-week EMA), represented by the red line in the chart above, near 0.070 BTC, down nearly 6% from the current price levels.

ETH “deflation” narrative

Ether’s bullish setup versus Bitcoin appears as ETH dominance has doubled versus other crypto assets in the past few years.

Notably, ETH’s market capitalization has risen to nearly 20.5% of the entire crypto market valuation in January 2023, from about 10% in December 2020, when the Ethereum network started its transition from proof-of-work (PoW) to proof-of-stake (PoS) with the launch of a dedicated staking smart contract.

*ETH.D weekly performance chart. Source: TradingView*

Becoming a PoS blockchain has brought two key changes to Ethereum’s economy. First, users temporarily lock away a portion of their Ether holdings into Ethereum’s PoS smart contract to earn yield. And second, the Ethereum network has started burning some transaction fees.

Both changes have had a deflationary impact on overall supply. As a result, the Ethereum network now regularly produces fewer Ether tokens than are taken out of circulation, which theoretically makes ETH a “deflationary” asset.

*ETH supply change since the Ethereum PoS upgrade in September 2022. Source: UltraSound.Money*

The ETH/BTC price has grown nearly 250% since December 2020 despite still being down roughly 50% from its all-time highs witnessed in 2017.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Bitcoin could see $25K by March 2023 as US dollar prints ‘death cross’ — Analysis

Bitcoin’s price recovery in 2023 has witnessed minimal institutional buying, casting doubt on whether BTC will rally beyond $25,000.

Bitcoin (BTC) shows the potential of stretching its ongoing price recovery to $25,000 by March, based on a mix of bullish technical and macro indicators.

Bitcoin price exits descending channel range

First, Bitcoin’s potential to hit $25,000 comes from its exit from a prevailing descending channel range.

A bull run or bull trap?

— Cointelegraph (@Cointelegraph) January 16, 2023

Notably, BTC’s price broke out of the range late last week, accompanying a rise in its trading volumes. The cryptocurrency’s move upside also pushed the price above its resistance confluence, comprising a psychological price ceiling of $20,000 and its 20-week exponential moving average (20-week EMA; the green wave) near $19,500, as shown below.

*BTC/USD 1-week candle chart (Coinbase). Source: TradingView.com*

Breaking three resistance levels with strong volumes shows traders’ conviction about an extended price rally. Should it happen, Bitcoin’s next upside target appears at its 200-week EMA (the yellow wave) at around $25,000 — a 20% rise from current price levels.

Dollar forms a “death cross”

Bitcoin’s bullish technical outlook appears against the backdrop of a relatively weaker U.S. dollar, which is down due to expectations that the Federal Reserve will stop raising interest rates as a result of lowering inflation.

The two assets have mostly moved inversely to each another since March 2020. As of Jan. 16, the daily correlation coefficient between Bitcoin and the U.S. Dollar Index (DXY), a barometer to gauge the greenback’s strength versus top rivaling currencies, was -0.83, according to TradingView.

*BTC/USD and DXY correlation coefficient. Source: TradingView*

A traditional technical setup sees more losses for the dollar ahead.

Dubbed a “death cross,” the setup appears when an asset’s 50-period moving average crosses below its 200-period moving average. For the dollar, the death cross shows its weakening momentum, meaning its short-term trend has been underperforming its long-term direction.

*DXY daily price chart. Source: TradingView*

“Expecting more downside in the mid to long term,” independent market analyst Crypto Ed said about the dollar, adding:

“Risk on assets should bounce more on that. Or better said: I expect BTC to break its bearish cycle as the big run in DXY is finito.”

Not a long-term Bitcoin price rally

Bitcoin has risen 30% above $20,000 in 2023 so far, but on-chain data shows that the buying trend lacks support from institutional investors.

For instance, the total amount of Bitcoin held by digital assets holdings such as trusts, exchange-traded funds and other funds has been declining during the coin’s price increase in recent months, according to CryptoQuant’s Fund Holdings index.

*Bitcoin fund holdings. Source: CryptoQuant*

In addition, no unusual transactions occurred on-chain but on crypto exchanges, per the comparisons made between CryptoQuant’s Token Transferred and Fund Flow Ratio metrics.

*BTC/USD versus Token Transferred (orange) and Fund Flow Ratio (blue). Source: CryptoQuant*

The Token Transferred metric shows the number of coins transferred in a specific timeframe, while the Fund Flow Ratio represents the ratio of coin transfers involving the exchange to the overall coin transfers networkwide.

“Usually at the bottom, institutional investors want to buy quietly through OTC trading,” noted market analyst MAC_D, adding:

“This trading was simply actively traded only on the exchange, and no unusual transactions occurred on the on-chain. […] The current institutional investors have remained calm and just watching. OTC trading will be brisk when they expect a full-fledged uptrend turn.”

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Bitcoin price bottom takes shape as ‘old coins’ hit a record 78% of supply

Bitcoin’s long-term holders’ NUPL metric has dropped to levels that coincided with market bottoms thrice since November 2011.

Bitcoin (BTC) and the rest of the crypto market have been in a bear market for almost a year. The top cryptocurrency has seen its market valuation plummet by more than $900 billion in the said period, with macro fundamentals suggesting more pain ahead.

Another bear cycle produces more BTC hodlers

But the duration of Bitcoin’s bear market has coincided with a substantial rise in the percentage of BTC’s total supply held by investors for at least six months to one year.

Notably, the percentage of coins held for at least a year has risen from nearly 54% on Oct. 28, 2021, to a record high of 66% on Oct. 28, 2022, data shows.

This evidence suggests that long-term investors are increasingly looking at Bitcoin as a store of value, asserts Charles Edwards, founder of digital asset fund Capriole Investments.

“Despite the worst year in stocks and bonds in centuries, Bitcoiners have never held on to more Bitcoin,” the analyst noted while highlighting how the floor and ceiling in Bitcoin held for the long term have been increasing after each cycle.

*Bitcoin hodl waves featuring long-term BTC holding highs and floors. Source: Glassnode/Capriole Investments*

Hodler data hints at Bitcoin’s price bottom

Additionally, Glassnode’s research shows that the Bitcoin tokens held for at least five to six months are less likely to be sold. The number of these so-called “old coins” typically rises during bear markets, highlighting accumulation by the patient, long-term investors as short-term investors sell.

The behavioral difference is visible in the chart below, where the downtrend in Bitcoin’s price coincides with a persistent decline in the number of “younger coins” and an increase in the number of coins inactive for at least six months, or “old coins.”

*Bitcoin’s percent young (red) vs. old (blue) supply. Source: Glassnode*

As of Oct. 31, the old coins comprise nearly 78% of the Bitcoin supply in circulation versus younger coins’ 22%, thus reducing the likelihood of intense sell-offs while forming a potential market bottom.

Moreover, on-chain data tracking Bitcoin’s price and its long-term holders’ (LTH) net unrealized profits and losses (NUPL) hints at a similar scenario.

*Bitcoin entry-adjusted LTH-NUPL. Source: Glassnode*

Notably, Bitcoin’s entry-adjusted LTH-NUPL has entered the capitulation zone (red) that has coincided with the end of previous bear markets, as shown above. That includes the strong bullish reversals witnessed in November 2011, January 2015 and December 2018.

As Cointelegraph reported, MicroStrategy, the world’s largest corporate holder of Bitcoin, has also reiterated its commitment to continue buying BTC for the long term.

“We have a long-term time horizon, and the core business is not impacted by the near-term Bitcoin price fluctuations,” explained MicroStrategy CEO Phong Le.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Ethereum flashes a classic bullish pattern in its Bitcoin pair, hinting at 50% upside

The formation of a bullish trading pattern suggests that the ETH/BTC pair could be on the verge of a trend reversal.

Ethereum’s native token, Ether (ETH), looks poised to log a major price rally versus its top rival, Bitcoin (BTC), in the days leading toward early 2023.

Ether has a 61% chance of breaking out versus Bitcoin

The bullish cues emerge primarily from a classic technical setup dubbed a “cup-and-handle” pattern. It forms when the price undergoes a U-shaped recovery (cup) followed by a slight downward shift (handle) — all while maintaining a common resistance level (neckline).

Traditional analysts perceive the cup and handle as a bullish setup, with veteran Tom Bulkowski noting that the pattern meets its profit target 61% of all time. Theoretically, a cup-and-handle pattern’s profit target is measured by adding the distance between its neckline and lowest point to the neckline level.

The Ether-to-Bitcoin ratio (or ETH/BTC), a widely tracked pairing, has halfway painted a similar setup. The pair now awaits a breakout above its neckline resistance level of around 0.079 BTC, as illustrated in the chart below.

*ETH/BTC weekly price chart featuring a cup and handle. Source: TradingView*

As a result, a decisive breakout move above the cup-and-handle neckline of 0.079 BTC could push Ether’s price toward 0.123 BTC, or over 50%, by early 2023.

*ETH/BTC weekly price chart featuring cup-and-handle breakout setup. Source: TradingView*

Time to turn bullish on ETH?

Ether’s strong interim fundamentals compared with Bitcoin further improve its possibility of undergoing a 50% price rally in the future.

For starters, Ether’s annual supply rate fell drastically in October, partly due to a fee-burning mechanism called EIP-1559 that removes a certain amount of ETH from permanent circulation whenever an on-chain transaction occurs.

*Ethereum supply rate post-Merge. Source: Ultra Sound Money*

XEN Crypto, a social mining project, was mainly responsible for raising the number of on-chain Ethereum transactions in October, leading to a higher number of ETH burns, as Cointelegraph previously covered .

Over 2.69 million ETH (approximately $8.65 billion) has gone out of circulation since the EIP-1559 update went live on Ethereum in August 2021, according to data from EthBurned.info.

It shows that the more clogged the Ethereum network becomes, the higher Ether’s probability of entering a “deflationary” mode gets. So, a depleting ETH supply may prove bullish, if the coin’s demand rises simultaneously.

In addition, Ethereum’s transition to a proof-of-stake consensus mechanism via “the Merge” has acted as an Ether-supply sucker, given that each staker — whether an individual or a pool — is required to lock away 32 ETH in a smart contract to earn annual yields.

The total supply held by Ethereum’s PoS smart contract reached an all-time high of 14.61 million ETH on Oct. 31.

*Ethereum 2.0 total value staked. Source: Glassnode*

In contrast, Bitcoin, a proof-of-work (PoW) blockchain that requires miners to solve complex mathematical algorithms to earn rewards, faces persistent selling pressure.

In other words, there is a comparatively higher selling pressure for Bitcoin versus Ether.

ETH/BTC needs to break the range resistance

Ether’s road to a 50% price rally versus Bitcoin has one strong resistance area midway, acting as a potential joy killer for bulls.

In detail, the 0.07 BTC–0.08 BTC range has served as a strong resistance area since May 2021, as shown below. For instance, the December 2021 pullback that started after testing the said range as resistance resulted in a 45% price correction by mid-June 2022.

A similar pullback could have ETH test the 0.057–0.052 range as its primary support target by the end of this year or early 2023.