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.
This month’s crypto retreat may get worse if key charts for Ether prove prescient https://t.co/gAnGoibEGV
— Bloomberg Crypto (@crypto) August 23, 2023
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.
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.