The cost of buying an Ethereum token (ETH) soared to a two-year high in the days leading up to conversion to a proof-of-stake asset.
The ETH / USD exchange rate [almost] It hit $ 600 on Monday after moving up 6.21 percent, its highest level since May 2018. Traders worriedly raised their bullish bets on the pair after anticipating a supply deficit in the Etherum market.
In retrospect, Ethereum expects a major network upgrade called Ethereum 2.0. Technical progress will increase the scalability, energy efficiency and security of the blockchain without affecting the inherent decentralization.
Meanwhile, Ethereum 2.0 also suggests changing ETH as an asset. The upgrade mainly adds three subclass attributes to the native token: that of capital assets, commodities, and stores of value.
The Ethereum Foundation requires ETH users to participate in an intelligent contract that would activate the ETH 2.0 mainnet. In total, the contract requires 524,288 ETH tokens. In return, the stakers receive attractive annual returns.
By Monday, the ETH 2.0 Smart Contract had collected around 50 percent of its target amount. If it has successfully reached 524,288 ETH by today, the team will start ETH 2.0 on December 1st. If the required number of Ethereum tokens is not collected, either the start will be delayed.
– SpartanBlack (@ SpartanBlack_1) 23rd November 2020
Escalating ETH deposits remove a small portion of the tokens from circulation. The lack of supply in connection with Ethereum rewards could lead to more ETH holders paying their holdings into the smart contract of ETH 2.0. That explains something why ETH / USD is rising.
“A steadily increasing rate signals the community’s trust in ETH 2.0 and the fact that people are willing to forego higher returns elsewhere in order to bet on the future of Ethereum.” explained a member of the Spartan Group, a crypto-focused asset management platform.
Ethereum is practically looking at a resistance-free zone as it contemplates further expanding its upward momentum.
Ethereum is trading upwards towards $800. Source: ETHUSD on TradingView.com
The trading setup against supporting fundamentals is as follows: Ethereum is trading upward within a rising wedge pattern; It pulls back to test the structure’s top trendline toward the bottom trendline (a short strategy), and it bounces back toward the top trendline when the bottom trendline is tested as support (a long strategy).
The uptrend continues until ETH / USD tests the top of the wedge where the two trend lines converge. That level is around $ 832, a level that acted as a critical resistance in April 2018. After testing, ETH / USD would break down and fall as high as the wedge (~ 156 USD).