Ethereum Price Prediction: A Bearish Triangle Points To A 10% ETH Drop
After rising above the crucial $2,000 mark in mid-July following the partial legal win by Ripple Labs against the U.S. Securities and Exchange Commission (SEC), Ethereum embarked on a downtrend that was halted at $1,600.
The largest altcoin by market capitalization, ETH has been consolidating above that level since then. It’s trading 20% below it’s high in the recent past at $2,030 with a number of on-chain metrics and the technical setup pointing to further losses.
The current bearish sentiment in the market is doing little to spark hopes of a sustained recovery in the near future. Data from Alternative, a firm that analyzes “emotions and sentiments” in the crypto market, reveals that the Crypto Fear and Greed index is in the “Fear” zone at 41.
This suggests that investors are worried about their investments and they may continue selling to minimize losses.
Declining TVL on Ethereum Reinforces the Downside
Apart from the drab price action and bearish market conditions, on-chain metrics point to decreasing demand for ETH. Notably, the total value locked (TVL) on the Layer 1 network has decreased from a 2023 high of $31.5 billion in mid-April to the current value of $21.44 billion, according to data from DeFiLlama.
Total Value Locked On Ethereum
The number of Ethereum addresses holding a minimum of $1,000 in ETH has hit its lowest point in six months.
This trend is worrying considering that the Ethereum price reached a peak of $2,140 in April, which was expected to have attracted more users to the network. Similarly, the amount of revenue generated on the platform has dropped by more than 84% from $14.43 million in mid-April to $3.3 million on Sept.5. This points to a lack of interest among investors and developers.
Part of the reason why there appears to be a lack of investor interest in ETH is that transaction fees on the Smart Contacts network remain high. Note that Ethereum’s average transaction fee has remained above $4 for the past six months. This keeps investors and developers away as they turn to cheaper Layer 2 solutions. This, in turn, results in decreasing revenues.
On the upside, whales appear to be taking advantage of the low prices to accumulate more. According to Ali Martinez, a popular crypto analyst on social media platform X, Ethereum Whales added 260,000 ETH with a staggering $425 million within 24 hours on one day this week.
— Ali (@ali_charts) September 5, 2023
This follows strong ETH whale movement at the beginning of the week. On Monday, two whale addresses moved a total of 300,000 ETH on Coinbase, the leading US-based crypto exchange..
Ethereum at Risk of 10% Losses
The Ethereum price is showing a descending triangle chart pattern on the daily chart. This is a highly bearish technical formation that is formed when an asset’s price forms a series of lower highs (forming the triangle’s hypotenuse) and relatively equal lows (representing the triangle’s x-axis). It is confirmed once a clear close is achieved below the x-axis.
The price target is reached by measuring the distance between the widest points in the triangle and adding it to the breakout point.
At press time, ETH was trading at $1,632 with bears determined to pull it below the $1,600 support line, embraced by the triangle’s x-axis. If they are successful, they may pull the smart contracts token lower toward the $1,550 swing low or the $1,500 psychological level.
A drop lower could see ETH drop further to reach the pessimistic target of the prevailing chart pattern at $1,471. Such a move would represent a 10% decline from the current price.
ETH/USD Daily Chart
This negative outlook was supported by the down-facing moving averages. These chart overlay indicators also presented areas of stiff resistance on the upside at $1,652, $1,756, and $1,805, where the 20-day, 50-day, and 100-day Simple Moving Averages (SMAs) sat respectively.
Also validating the grim outlook for Ethereum was the downward movement of the Relative Strength Index (RSI). The position of this oscillating trend-following indicator at 38 in the negative region suggests that there were more bears than buyers in the market.
On the upside, if the ETH were to stage a sustained recovery, it has to turn up from the current level rising above the areas defined by the 20-day SMAs, embraced by the triangle’s descending trendline.
This would confirm an exit from the bearish triangle with the next line of resistance rising from the 50-day and 100-day SMAs respectively. Shattering these barriers would see Ether’s price rise toward the $1,900 psychological level. A bullish breakout would be confirmed if the token produces a daily candlestick close above the $2,000, placing Ethereum on a path to a sustained recovery.
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