3 reasons why Ethereum price can hit $4K in April

Ethereum

Three market catalysts suggest that Ethereum’s native token Ether (ETH) is well-positioned to reach $4,000 this month.

Google searches for “Ethereum merge” spike 

Internet users’ interest in Ethereum’s upcoming network upgrade, dubbed “the Merge,” surged substantially in the week ending April 2, Google Trends’ data shows.

Searches for the keyword “Ethereum Merge” reached a perfect Google Trends score of 100 on a 12-month timeframe with most traffic coming from the U.S., Singapore, Canada, and Australia.

Merge, also called ETH 2.0, refers to the Ethereum network’s full transition to Proof-of-Stake (PoS) from Proof-of-Work (PoW), a development that had been touted as one of the major catalysts behind Ether’s rebound from $2,500 on March 14 to over $3,500 this week.

The bullish outlook stems from Merge’s proposal to reduce Ether’s issuance rate, leading to a possible supply peak in the total number of ETH in circulation. With PoW mining, ETH’s supply has grown by 3% every year.

The spike in public interest for “Ethereum Merge” suggests there is growing buzz among crypto investors and traders as the Ethereum upgrade nears. Last month’s launch of Kiln is the final public testnet before the whole network transitions to PoS sometime this year.

Exchange ETH reserves drop to a three-year low

At the same time, ETH supply downtrend on crypto exchanges continues. 

Notably, net Ether reserves across all the exchanges have dropped to their lowest levels since August 2018, suggesting that traders have been withdrawing ETH en masse to hold them long-term or to stake them across DeFi liquidity pools.

What’s more, the number of addresses with a non-zero balance continues to rise, suggesting growing adoption and distribution of ETH.

Technicals hint at $4K ETH price

Chances of ETH price reaching $4,000 in April are also boosted by a classic technical pattern.

Dubbed “symmetrical triangle,” the pattern usually forms when the price consolidates sideways inside a range defined by a lowering upper trendline and a rising lower trendline, following a sharp move upside or downside.

In an ideal scenario, the triangle resolves after the price breaks in the direction of its previous trend, and is thus considered a “continuation pattern.”

Related: Crypto venture capital firms see surging assets under management

However, symmetrical triangle breakouts do not necessarily result in a continuation trend. For instance, in the book Technical Analysis of Stock Trends, technical analysts Robert Edwards and John Magee note that about 25% of all symmetrical triangle breakouts lead to reversals, i.e., the price does not break in the direction of its previous trend, thus defying anticipations.

Ethereum’s current breakout appears to be a reversal as it bounces to the upside instead of continuing its previous trend to the downside, as shown in the chart below.

A symmetrical triangle’s potential breakout target is calculated after measuring the maximum length between the pattern’s upper and lower trendline and then adding the result to its breakout point.

This puts the ETH/USD bullish target at nearly $4,000.

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.

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