Ethereum price risks dropping to $2K on ‘bear flag’ setup

If a technical indicator is correct, Ethereum’s native token Ether (ETH) will continue its 30% slump to the lowest price since July 2021.

Bearish pattern shown by Ether chart

ETH’s price dropped to $2,159, a six-month low, on January 24, 2022. However, it rebounded sharply and reached $2,724 days later. This created the “bear flag” chart pattern, which suggests that the price could drop as low as $2,000 or 17% from its current levels.

When the price moves lower following a strong downward momentum, a bear flag is displayed. The price will drop as much as the length the previous decline. This is called a “flagpole”.

Daily price chart for ETH/USD with bear flag setup Source: TradingView

The flagpole’s height is $850 in Ether’s instance. This shifts Ether’s bear flag price target to $2,000. A similar decline was seen in another bear flag formation earlier this year as illustrated in the chart.

Rate increases in the future

Due to Bitcoin (BTC), Ether’s vulnerability to macroeconomic trends, the possibility of Ether reaching $2,000 in the next months is even greater.

According to CryptoWatch data, the positive correlation between Bitcoin and Ethereum has been 0.92 over the past 30 days. This means that Ether predicted the BTC price trends in January 2022 with 92% accuracy.

The last 30 days have seen a significant correlation between Bitcoin and altcoins. Source: CryptoWatch

The Federal Reserve’s dovish policies are at the heart of this bearish outlook. The decision by the United States Central Bank to withdraw its $120-billion-a month COVID-19 stimul program in March and to raise benchmark rates from near-zero levels following that has started to hurt so-called pandemic winners such as tech stocks and gold.

Paul Krugman was a Nobel-prize-winning economist who is also a long-term skeptic about cryptocurrencies. He predicted a Bitcoin price crash for 2022 and noted that it had “disturbing echos of the 2008 subprime crash”.

He stated that regulators made the same mistake as they did with subprime. They failed to protect the public from financial products not understood by the public and many families could end up paying the price.

For ETH price, $2,000 for the first time

Many analysts believe that Ethereum’s token will climb again in 2022 despite the bearish appearance of Ether under the shadows Bitcoin. This is due to its participation in emerging non-fungible token and decentralized finance sectors.

Mark Cuban, a billionaire investor, noted last year that Ether could outperform Bitcoin in terms growth.

Eth/L2s is my favorite, and I don’t see the point in arguing about inflation, halving, or the Trilemma. It is more appealing to me because it allows me to see endless possibilities that can change the biz/consumer landscape forever. You need to purchase Eth/L2 to access them. BTC does not have this demand pull
— Mark Cuban (@mcuban) October 17, 2021

Mike McGlone, senior commodity strategist for Bloomberg Intelligence, predicted that Ether would reach $5,000 in 2022, despite the Fed’s tapering policies. According to the veteran analyst, the central bank’s rate rise plans were a “win-win situation” for Bitcoin and Ether in comparison to the U.S’s high inflation over the past four decades.

Related: Ethereum hashrate scores new ATH in PoS migration

McGlone predicted that Ether would hit $2,000 first, before it continued its climb higher. He said:

“A decline in the stock markets is a top force to stop central bank restraint, with implications […] Price supports exiting 2020 of approximately $30,000 for Bitcoin and $2,000 Ethereum seem solid.” You should do your research before making any investment or trading decision.
https://cointelegraph.com/news/ethereum-price-risks-dropping-to-2k-on-bear-flag-setup

Charles Griffin

Charles Griffin – Business and Transportation I am Charles Griffin with more than 10 years of experience in the Stock market industry, I am energetic about Finance and Business news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of Magnewspress.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Business News category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.  

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