Ethereum price to rise to $2,250 as this bullish signal flashes

• The ETH/BTC pair has formed a cup-and-handle pattern on the technical chart raising the chances of a 60 percent price rally.
• The declining ETH supply with a burning mechanism and whale purchases could further contribute to the price rally.

Amid the crypto market rally last week, the world’s second-largest cryptocurrency Ethereum (ETH) once again outperformed its rival Bitcoin. ETH has been seen gaining strength during bullish market momentum and has been closing the gap with Bitcoin.

As we move towards the year-end, Ethereum (ETH) could further gain strength over its top rival as per the technical setup. The ETH technical chart shows a classic “cup and handles” pattern which forms when the underlying asset undergoes a U-shape recovery. The pattern also has a slight downward drift that represents the handle while maintaining a common resistance line i.e. the neckline.

Traditionally, the cup and handle pattern has been seen as a bullish pattern. A breakout from the handle neckline could lead to a 60 percent rally in the underlying asset, here Ethereum (ETH). If this turns true, the ETH price could rally all the way to $2250 here from its existing price of $1552.

Theoretically, this profit target comes from measuring the distance between the neckline and the lowest point. The ETH/BTC technical setup is forming a similar cup-and-handle pattern.

ETH is currently trading at a neckline of 0.079 BTC. Any decisive breakout above this could lead to a 50 percent price rally in ETH shooting it to 0.123 BTC.

Factors supporting the ETH price rally

There are a few good factors supporting the ETH price rally from here onward. With the Ethereum Merge event, the Ethereum blockchain witnessed a fundamental shift resulting in stronger fundamentals than before. As these fundamentals improve further with time, they set the stage for the ETH price rally.

Due to the ETH burning mechanism, Ethereum’s annual supply rate dropped significantly in October. The Ethereum fee-burning mechanism EIP-1559 removes certain ETH from permanent circulation during on-chain ETH transactions.

In October last month, the social mining project XEN Crypto was responsible for raising the number of on-chain Ethereum transactions. This led to a high number of ETH burns.

The EIP-1559 update went live on the Ethereum blockchain last year in August 2021. Since then nearly 2.69 million ETH have gone out of circulation. Furthermore, Ethereum’s PoS transition has also helped in reducing the circulating supply.

To earn annual yields from ETH staking, each individual or pool must lock 32 ETH in a smart contract. Earlier on Monday, October 31, Ethereum’s PoS smart contract reached an all-time high of 14.61 million.

Another positive development for ETH price is that the whales have been scooping up the supply. On-chain data provider Santiment reported: “Ethereum’s top 10 largest non-exchange addresses have been accumulating assets after their big drop-off leading up to September’s merge. They have added 6.7% more $ETH. Meanwhile, the top 10 exchanges are standing pat with just an 0.2% rise”.