Ethereum’s native token Ether (ETH) continues to face downside risk in an environment with higher interest rates. One analyst thinks that Ether (ETH) could be subject to a bear market as the market considers the release of the Merge in August.
What’s the difference between ETH and $4K?
According to Wolf, an independent market analyst, Ether’s value could rise to $4,000 by 2022.
Analysts saw ETH moving within a multi-month ascending triangular pattern that includes a horizontal trendline resistance as well rising trendline support.
Notably, ETH’s most recent retest of its lower trendline may signal a major rebound towards its upper trendline (which is around the $4,000 level, as shown below).
Three-day price chart for ETH/USD featuring ascending triangle setups. Source: Wolf/TradingView
Wolf drew his bullish cues on a similar triangle setup in 2016, which was preceded by a major bull market of $1 to $27. Similar to the 2017 ascending triangle, ETH/USD also rose 270% to more than $1,500.
Merge vs. low liquidity, “death spiral”
Preston Van Loon, one the Ethereum core developers confirmed that Wolf’s fractal-based analysis was made as Wolf, one of the Ethereum project’s long-awaited upgrades to a proof–of-stake consensus mechanism, would take place sometime in August.
Wolf pointed out that Ethereum was creating a “bear trap”, which would make sense before the upgrade, complementing his technical setup as described above.
A few months before the #merge, bear trap is common. $ETH
— Wolf (@IamCryptoWolf, May 20, 2022
The Ether price rally of 2021 was largely driven by the pending upgrade. Many investors believed that it would solve the Ethereum blockchain’s long-standing scaling problem and reduce transaction and gas costs. The launch was delayed by Ethereum Foundation.
“Undoubtedly this lack of progress played a major part in Ethereum’s recent decline in price,” Bitfreedom Research, a crypto-stock research and tech-stock entity, stated while predicting that ETH will drop to $950-$1,900 between October 2022.
Similar: Analysts find parallels to March 2020: Will it be different this time?
Higher interest rates were the main reason for its bearish outlook on Ethereum, according to:
“The crypto market is extremely volatile, and crypto companies require a lot of cash to fuel rapid growth.” This can cause Ethereum’s ERC20 token economy to spiral downwards if there is no cash. You should do your research before making any investment or trading decision.