The cryptocurrency market was sent into a frenzy as Ethereum price crashed to a key support level on Monday, invalidating a crucial bullish chart pattern. Ethereum (ETH) plummeted to a low of $2,146, marking its lowest level since August of the previous year. This significant drop of approximately 40% from its December high has raised concerns among investors and analysts alike.
The weekly chart for Ethereum reveals the formation of two distinct patterns in recent months. Firstly, the cryptocurrency struggled to break above the $4,000 level, forming a triple-top formation since March of the previous year. A triple-top is a well-known bearish signal in technical analysis, often indicating further losses once the price drops below the neckline. In Ethereum’s case, the neckline was at $2,146, the same level as its lowest point in August of the previous year.
Additionally, Ethereum also formed an inverse head and shoulders pattern, a popular bullish indicator in technical analysis. This pattern consists of a neckline, two shoulders, and a head. In this case, the neckline was at $4,000, the right shoulder at $2,830, and the head at $2,145. However, the invalidation of the inverse head and shoulders pattern occurred as Ethereum moved below the left shoulder, signaling potential further declines.
With the triple-top pattern now in play, Ethereum could potentially face more downside pressure, possibly dropping to the next key support level at $1,520, its lowest point in October of 2023. A strong bullish breakout would only be confirmed if Ethereum manages to rally above the triple-top resistance at $4,000.
The challenges facing Ethereum extend beyond its price struggles, as the network is also grappling with significant obstacles. Data from TokenTerminal shows that Ethereum is no longer the most profitable blockchain network, with other networks such as Circle, Solana, Tron, Jito, and Tether surpassing it in terms of fees generated. Ethereum has also lost its dominance in the decentralized exchange sector, with lower transaction volumes compared to BNB Chain and Solana.
Furthermore, Ethereum’s spot exchange-traded funds have seen a lukewarm reception on Wall Street, attracting significantly less inflows compared to Bitcoin funds. These developments have raised concerns about Ethereum’s position in the cryptocurrency market and its ability to compete with other blockchain networks.
In conclusion, the recent price crash and invalidation of key bullish patterns have put Ethereum in a precarious position, with further downside risks looming. Investors and analysts will be closely monitoring the cryptocurrency’s price movements and network developments in the coming days to assess its future trajectory in the market.