In the past 30 days, ETH's price has surged 33%, raising speculations about the possibility of this cryptocurrency reaching new highs. Although this seems unlikely as the month comes to a close, analysts' forecasts for Ethereum in December could yield additional profits for investors.
We have analyzed these forecasts, clarifying the key factors driving the optimistic sentiment around ETH.
Analysts are optimistic about Ethereum but with conditions
According to Juan Pellicer, a senior researcher at IntoTheBlock, Ethereum could reach a new all-time high in December. However, he believes this will only happen if ETH can surpass the $4,000 threshold. Pellicer also states that ETH could closely follow Bitcoin's performance in this case, with the accumulation of large investors and individual investor participation playing a key role.
“The outlook for Ethereum closely reflects the positive trajectory of Bitcoin, with significant potential for a year-end rally if it surpasses the previous ATH of $4,000. Our on-chain analysis is monitoring the accumulation trends of large investors, indicating spot purchases from both institutional and individual investors,” Pellicer said.
However, currently, the net inflow of large Ethereum investors has decreased, indicating that 'whales' are no longer accumulating as much as they were a few days ago. If this trend continues, ETH's price may struggle to reach $4,000 next month. Conversely, if large investors begin accumulating again, the situation could change and the forecast for Ethereum in December could become optimistic.
Net inflow of large Ethereum investors | Source: IntoTheBlock
Brian Quinlivan, a leading analyst at Santiment, believes an important metric to watch is the funding rate of Ethereum on BitMex and Binance. The funding rate indicates whether long or short positions are dominant in the derivatives market. When this rate is positive, long positions dominate, and when negative, short positions dominate. Currently, the funding rate on both exchanges is very positive, indicating that long positions are dominant and most traders expect ETH prices to rise in December.
Ethereum Funding Rate | Source: Santiment
However, Quinlivan believes that the funding rate needs to remain neutral for the price of ETH to catch up to BTC. “But with long positions dominating on these leading exchanges, achieving significant growth will be challenging. History shows that we need the funding rate to remain neutral or lean towards short to justify major price increases in the future,” Quinlivan said.
Another analyst, Julio Moreno, Head of Research at CryptoQuant, uses the Market Value to Realized Value (MVRV) ratio to assert that ETH is approaching an undervalued state compared to BTC. The MVRV ratio is an important indicator of whether an asset is undervalued or overvalued. Based on historical data, Moreno suggests that ETH may replicate the price action from February 2020, a period that marked the start of the bull run that reached an all-time high in 2021.
Ethereum MVRV Ratio | Source: CryptoQuant
“Currently, ETH's relative valuation compared to Bitcoin is approaching an extreme undervaluation zone. The last time ETH was undervalued like this compared to Bitcoin was in February 2020,” Moreno said.
ETH Price Prediction: $4,000 or higher
From a technical perspective, ETH has formed a bullish flag pattern on the daily chart. The bullish flag pattern consists of a strong price increase, often referred to as the 'flagpole,' followed by a tight rectangular consolidation phase known as the 'flag.' This pattern usually indicates an upcoming breakout, where the price pauses and regains strength before continuing to rise. As seen, ETH's price has broken out of the consolidation phase.
Ethereum Price Analysis | Source: TradingView
Although it has faced resistance around the $3,600 level, it is likely to bounce back. If this happens, the prediction for Ethereum in December could see values rising above $4,000. However, if this cryptocurrency faces selling pressure, the trend could change and ETH could drop to $3,003.