Ethereum Enters ‘Scarcity Mode’, Paves Way for ETH Rally to $6K – Analyst

Ether (ETH) posted its biggest three-day return of 2024 after President-elect Donald Trump was declared the winner of the US presidential election. The rally also took the altcoin above resistance above $2,800, breaking the lower consolidation range of the 96-day trend.

As the crypto community awaits a new bullish leg, Ether has flashed a strong buy signal based on its historical setup from 2023.

Ethereum reflects a bullish setup from 2023

In the year In 2023, Ethereum showed a downward trend between Q2 and Q4, followed by a bullish region (green box in the chart) in Q3 and early Q4. Once ETH broke out of its storage range, it also recorded a break above the descending resistance trend line to indicate a trend reversal.

The final proof of strength was completed after the altcoin showed a common daily close above the 50-day, 100-day and 200-day EMA levels. Following these controversies, Ethereum increased by 129% at the end of Q1 2024, reaching an annual high of $4,100.

Now, Ether has revealed the true bullish composition. The chart below shows that the highlighted altcoin had a similar downward trend between Q2 and Q4 and a longer rally in Q3. In the past few days, every violent conflict since 2023 has been repeated. ETH broke above the long-term rally line to maintain the daily close above the 50, 100, 200-day EMA level.

If the price action repeats, Ethereum is looking at a price range of $6,000 to $6,500 in Q1 2025.

Related: Ethereum Holder Turns $38K Into $30M After 8 Years

Ethereum ETFs welcome $132M in revenue

While institutions stockpiled Bitcoin in the Spot BTC ETF, the sentiment was not the same for Ether. However, ETH's recent rally has restored interest in smart money, as ATM ETF flows saw a positive net inflow of $132 million between November 6 and November 7.

Farside data highlighted a sharp contrast between the past two days and 2 weeks ago, which saw ETH's outflows of $63.2 million as of November 4.

Meanwhile, venture capitalist Henrique Centeiro believes that Ethereum is now “entering a state of scarcity.” Centieiro outlined a number of reasons behind his claim, suggesting that a glut of supply and increased demand could trigger a massive rally for the altcoin.

With more than 42.6% of ETH locked in stock contracts and hitting record lows in 2024, investors are expected to see positive returns from Ether in the long term.

Related: Ether Set For $3.2K Break As ETH ETF Earnings Turn Positive

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