To grasp the potential risks facing Ethereum, it’s important to understand the concept of the wedge formation and how it has impacted Ethereum in the past. In 2019, Ethereum formed a wedge pattern, where the price created progressively higher lows, forming a converging triangle. This pattern typically indicates a period of consolidation before a significant price movement.
Key support levels during the 2019 wedge pattern included $81.21, $102.65, $149.31, and $191.37. The formation of this wedge eventually led to a notable decline in Ethereum’s price. The cryptocurrency fell below the wedge pattern prior to the Federal Reserve’s first rate cut of 2019. This drop continued until the ETH/BTC pair reached a bottom, signaling the end of the downtrend and paving the way for a new upward trend.
Fast forward to 2024, and Ethereum has developed a wedge pattern that bears striking similarities to the one seen in 2019. The current pattern features higher lows compared to the previous cycle, with recent lows at $886, $1,069, $1,515, and a more recent low near $1,954.
The key question now is whether Ethereum’s current wedge pattern will follow the same trajectory as 2019. According to Cowen’s analysis, there is a risk that Ethereum might experience a breakdown similar to what happened five years ago. This could lead to a significant downward movement in price, potentially mirroring the 2019 decline.
Benjamin Cowen’s analysis suggests that Ethereum could face a major price drop, potentially falling to around $1,200 by December 2024. This projection is based on historical data from previous market cycles, specifically 2016 and 2019, when Ethereum experienced substantial drops under similar conditions.
Cowen’s analysis indicates that a decline to $1,200 would represent a significant 48% drop from Ethereum’s current trading price of approximately $2,342. This potential decline is based on historical patterns and the current market environment, which could mirror past cycles of volatility and downturns.
Recent on-chain data and whale activity have added to the bearish sentiment surrounding Ethereum. Notably, a foundation wallet recently transferred Ethereum valued at around $2.38 million to a multi-signature wallet. This transaction is part of a broader trend where the Ethereum Foundation has been offloading large amounts of ETH.
Previously, the Ethereum Foundation moved 35,000 ETH worth over $94 million to the Kraken exchange. These large-scale transfers have raised concerns about the impact on the market, as significant selling pressure from major holders can exacerbate price declines.
Ethereum’s potential for a significant downturn is not occurring in isolation but within a broader context of market uncertainty. The cryptocurrency market has faced various challenges this year, including fluctuating prices and evolving regulatory environments, contributing to overall market volatility.
For investors, understanding these patterns and preparing for potential risks is essential. Ethereum’s current situation highlights the importance of monitoring technical indicators and historical trends to navigate the unpredictable nature of the cryptocurrency market.
While the possibility of a 48% decline might seem alarming, it also underscores the cyclical nature of markets and the need for strategic planning. Investors should consider these factors when evaluating their portfolios and making decisions about their investments.
A finance graduate, Maheen Hernandez has been drawn to cryptocurrencies ever since Bitcoin first emerged in 2009. Nearly a decade later, Maheen is actively working to spread awareness about cryptocurrencies as well as their impact on the traditional currencies. Appreciate the work? Send a tip to: 0x75395Ea9a42d2742E8d0C798068DeF3590C5Faa5
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