According to one market analyst, Ethereum’s native token Ether (ETH) will likely drop below $2,000
Ether depicts a classic bearish continuation setup
Wolf, pseudonymous market analyst, shared the negative outlook on March 7, as Ether’s price rose by more than 3% to almost $2,650 a day after it tested its upward trendline at $2,500.
Wolf saw Ether’s continued decline ahead of the intraday upside reversal and ignored it.
Daily price chart for ETH/USD Source: TradingView
Wolf’s analogy centered around a “symmetrical triangular,” a technical analysis pattern that forms when prices fluctuate between two converging trendlines.
The price will break out of the triangle range in a “perfect” scenario if it follows its previous trend. Many analysts also consider symmetrical triangles to be a continuation pattern.
Since the beginning of 2018, Ether has been moving in a symmetrical triangle shape. After reaching $4,850 in November 2021, ETH fell by more than half. The “continuation” rule has led to ETH’s triangle pattern being biased towards bears.
Daily price chart for ETH/USD featuring symmetrical triangle configuration. Source: TradingView
This means that the price could fall as far as the distance between the upper and lower trendlines of the triangle after it breaks out of the pattern.
Ether’s decisive move beneath the Triangle support, if accompanied with a surge in volume, could see it testing levels below $2,000 as its next downside target.
Wolf wrote, “Bulls will defend long-term diagonal, bears’ will try push price to $1.8000-1.9000.”
ETH accumulation continues
Despite a recent increase in ETH accumulation by its wealthiest investors, Wolf has a bearish outlook on Ether.
According to data from Santiment, Ethereum addresses have accumulated 2.2% the total ETH supply minted over the past six months. The buying spree coincided also with ETH’s price correction which suggests that they had been buying the dip.
Distribution of Ethereum. Source: Santiment
According to Glassnode data, retail traders also entered the Ethereum marketplace during the recent Ether price correction. On March 7, the total number of Ethereum addresses with at least 0.01 ETH was at an all-time high, reaching 6.972,000,000. The record-breaking 21.8 million addresses that have a minimum balance below 0.01 ETH also reached an all-time high.
Ethereum number of addresses that have a balance of at least 0.01 ETH. Source: Glassnode
The flip side is that the number of addresses with at least one ETH hit an all-time high on February 10, at 1.42 million, but it has since fallen to 1.41 million.
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Many analysts are still bullish on Ether, citing this year’s transition to proof of-stake from proof of work. Marcus Sotiriou from GlobalBlock, a market analyst for Ether, stated that an upgrade to Ether would have a “positive effect” on Ether’s long-term price.
He explained to Business Insider that this was because it would dramatically lower the cost of transactions on Ethereum, which is the main drawback currently for Ethereum.
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