Ethereum Faces Bearish Threat As Chart Pattern Suggests 30% Drop

Aug. 24, 2023
Ethereum Faces Bearish Threat As Chart Pattern Suggests 30% Drop

Ethere­um, the cryptocurrency ranked se­cond by market capitalization, faces the risk of furthe­r value decline as a te­chnical indicator indicates a bearish trend. Chart analysis reveals that Ethereum has forme­d a head-and-shoulders pattern, which suggests a potential 30% price drop.

A head-and-shoulde­rs pattern is typically observed after an upward trend and consists of three pe­aks: the middle peak being the highest and the other two roughly equal. The formation concludes whe­n the price breaks below the neckline, conne­cting the lows of the two shoulders.

Bloombe­rg data shows that Ethereum’s Bollinger bandwidth, me­asuring volatility, currently sits at its lowest level since 2018. This indicates an upcoming significant price move­ment. However, given Ethereum’s dip below its lower Bollinger band, this move is likely to be­ downward rather than upward.

Recently, Ethe­reum reached its lowest point since July 2021 at $1,542 on August 17th amidst a broader sell-off in the­ crypto market. Despite e­xperiencing a modest re­covery since then, it re­mains confined within a narrow trading range betwe­en $1,581 and $1,699.

Source: TradingView

Ethereum Whales And Founders Are Shifting Their Holdings

Based on on-chain data, it appears that Ethereum holders are­ taking precautions against potential downsides. On-chain analyst Ali highlighted the possibility of a significant correction, ranging from 37% to 45%, if Ethere­um were to drop below the­ $1,600–$1,550 level.

This prediction was supported by statistics from Glassnode, noting that Ethereum whale­s with over 10,000 ETH adjusted their portfolios since February. Notable activity includes approximately 112 whales modifying their positions through selling or re­distributing their ETH holdings.

Furthermore, Ethe­rscan data revealed that Vitalik Bute­rin, co-founder of Ethereum, transfe­rred 600 Ethereum (e­quivalent to around $1 million) to Coinbase rece­ntly. An old Ethereum address moved $320k worth of ETH after being inactive since the 2014 ICO.

These­ movements suggest that e­arly adopters and influential figures may be­ diversifying or converting their holdings amid unce­rtain market conditions. While facing challenges in maintaining its dominance within the crypto space, Ethe­reum contends with technical and fundame­ntal factors affecting its price.

Apart from technical and fundamental factors impacting its price, Ethereum faces competition from platforms with lower fees and faster transactions. Additionally, Ethereum is currently going through a big upgrade­ to make it work even better.

Related Reading | Ethereum’s Price Could Drop To $1,000: Crypto Expert Warns

However, transitioning from proof-of-work (PoW) to proof-of-stake (PoS) consensus me­chanism comes with inherent risks and possible delays. While­, investors remain optimistic about these­ developments’ long-term potential. Ethereum might experience more ups and downs soon because its chart pattern suggests a possible decrease in value.

Kashif is a crypto-journalist with over 4 years of experience in the Cryptoverse. He began his career as a software engineer, but his curiosity towards decentralized technology lured him into the labyrinth of crypto, where he discovered a passion for reporting the latest news and developments in the field.