Over the past 30 days, the price of Ethereum (ETH) has risen by 33%, sparking speculation that the cryptocurrency could reach a new all-time high. As the month comes to a close, this may seem somewhat impossible, but analysts' predictions for Ethereum in December could bring more profits to holders.
BeInCrypto explores these predictions and uncovers the key drivers behind the positive sentiment for ETH.
"If it breaks the $4,000 all-time high this year, the chances of an end-of-year rally are high"
According to Juan Pellicer, senior research analyst at the on-chain data platform IntoTheBlock, the December forecast for Ethereum suggests the cryptocurrency could set a new all-time high. However, Pellicer said this prediction would only be realized if ETH manages to break through the $4,000 mark.
The researcher also mentioned that in this case, ETH could closely follow Bitcoin's performance, and the accumulation by large holders and retail participation could be the key to its potential.
"The outlook for Ethereum closely reflects the positive trajectory of Bitcoin, and if it successfully breaks above the previous $4,000 ATH, the potential for an end-of-year rally is quite significant. Our on-chain analysis is looking at the accumulation trend of large holders, which will likely indicate spot buying from both institutional and retail investors." – Juan Pellicer, senior research analyst at IntoTheBlock
However, at the time of writing, the net inflow of large ETH holders has decreased, suggesting whales are not accumulating as much as they were a few days ago. If this continues, ETH may struggle to reach $4,000 next month.
On the other hand, if these holders start accumulating again, the situation could change, and the Ethereum December forecast could end up positive.
Brian Quinlivan, the head analyst at the crypto online data platform Santiment, says the Ethereum funding rates on BitMEX and Binance are an important indicator. The funding rate shows whether longs (buyers) or shorts (sellers) are dominating the derivatives market.
When the funding rate is positive, longs are dominant. However, if it's negative, shorts are dominant. At the time of writing, the funding rates on both exchanges are highly positive, indicating that longs are dominant and most traders expect ETH's price to rise in December.
However, Quinlivan believes that for Ethereum to catch up to BTC, the indicators need to remain relatively neutral.
"But with longs dominating shorts so significantly on these major exchanges, a substantial rally from here would mean overcoming a lot of odds. Historically, we've seen that to justify major future rallies, the funding rates need to be neutral or even slightly tilted towards shorts." – Brian Quinlivan, head analyst at Santiment
Another analyst who spoke to BeInCrypto about ETH's potential next month is Julio Moreno, the research lead at CryptoQuant. Using the market value to realized value (MVRV) ratio, Moreno says ETH is approaching an undervalued state compared to BTC.
The MVRV ratio is a key metric that shows whether an asset is undervalued or overvalued.
Based on the above image and historical data, Moreno suggests that ETH could soon replicate the price movements seen in February 2020, which was the start of the 2021 all-time high surge.
"Currently, the relative valuation of ETH to Bitcoin (the purple line in the chart) is approaching the extremely undervalued territory (the green zone). The last time ETH was this undervalued compared to Bitcoin was back in February 2020." – Julio Moreno, research lead at CryptoQuant
ETH Price Prediction: Most Analysts Expect a Break Above $4,000
From a technical perspective, Ethereum has formed a bullish flag on the daily chart. The bullish flag pattern is often characterized by a "pole," which is a sharp rise, and a "flag," which is a tight rectangular consolidation phase.
This formation generally indicates an impending breakout, with the price taking a breather and gathering strength before rising. As seen above, ETH's price has broken out of the consolidation phase.
It faced resistance at $3,600, but it is likely to bounce back. If this happens, the Ethereum December forecast could see its value surpass $4,000. However, if the cryptocurrency faces selling pressure, the trend could reverse, and ETH could drop to $3,003.
