Analyses

Upcoming upgrade to reduce ETH inflation rate, Bitcoin halving happening in less than eight days – BTC, ETH, LTC Price Analysis, 4 May, 2020

Ethereum's inflation rate will be reduced with the upcoming ETH 2.0 upgrade, according to a podcast interview called «Internet Money» in which POV Crypto talked with Vitalik Buterin about the future of the cryptocurrency. During the interview, Buterin explained that one of the ideas behind the transition from Proof-of-Work to Proof-of-Stake is to reduce the issuance of new coins and have a maximum of below 2 million new ETH a year.

Many cryptocurrency enthusiasts believe that the launch of ETH 2.0 and the reduction of the inflation rate will impact the price of Ethereum positively. 

Another similar event that is of greater importance for the crypto world is the upcoming and long-awaited Bitcoin halving – an event where the number of generated Bitcoin rewards (inflation rate) per block will be halved. According to CoinGecko, it will happen in less than eight days.

Most of the Bitcoin bulls expect the Bitcoin halving to trigger the next bull run. One of them is the well-known PlanB:

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Source: Twitter

According to the chart above, that is based on a theoretical model, the price of Bitcoin may reach $100,000 within the next one year (a scenario which we consider as extremely bullish and not a realistic one).

Because of the upcoming Bitcoin halving, last week was quite a bullish one for the cryptocurrency market. Bitcoin was able to surpass the psychological level of €8,000 and it even reached levels close to €8,800 on Thursday, April 30th.

However, the market starts the current week on the back foot as the rally is losing steam. At the time of writing, according to Coin360.com, one Bitcoin costs €7,986.91 (-3.82%), one Ethereum – €184.61 (-6.42%), and one Litecoin – €42.36 (-6.07%):

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Daily crypto market performance. Source: Coin360.com

Now let's have a look at the price charts of the major cryptocurrencies against the euro.

BTC/EUR

In the monthly time frame (MN), in April BTC/EUR formed a «Bullish Engulfing»:

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A Bullish Engulfing candlestick pattern usually occurs at the bottom of a downtrend and is thought to signal the beginning of a trend reversal. 

So with this in mind, it is highly probable that in May we will see higher prices in the chart of BTC/EUR than the current level of €7,931.88 per one digital coin.

ETH/EUR

In the 4-hour chart (4H), last week ETH/EUR surpassed the 61.8% Fibonacci retracement level (€199.47) and reached the upper line of the «Ascending Channel» (uptrend): 

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Right now, the price of Ethereum is in a correction phase and is heading towards the lower line of the ascending channel.

We consider three scenarios on how things can unfold from here - a bullish scenario in which the uptrend resumes and ETH/EUR hits the 61.8% Fibonacci retracement level (€199.47) again; a neutral scenario – the price of the cryptocurrency starts to consolidate at the 50.0% Fibonacci retracement level (€178.39), and starts to move sideways; and a bearish scenario – a breakdown of the «Ascending Channel».

In our estimation, the most likely scenarios are the first and the second one, since ETH/EUR has been moving within an uptrend.

LTC/EUR

In the 1-day time frame (1D), LTC/EUR is fluctuating between the 30-day Moving Average (MA 30), and the 90-day moving average (MA 90):

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Although the price of Litecoin has been increasing since mid-March, it is important to outline that MA 30 is still below MA 90. Hence, there is no reliable buy signal. To open a long position we will wait for a moving-average crossover.

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The analysis is purely informational and does not constitute investment, financial, trading, or any other sort of advice and you should not treat any of Bitvalex's content as such. Bitvalex does not recommend that any cryptocurrency should be bought, sold, or held by you. You are solely responsible to conduct your own due diligence and consult an advisor before making any investment decisions.


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