Ethereum has faced challenges in recovering fully from its weekly lows, and historical performance suggests further downside risks.
According to market analysts, the recent price structure shows similarities to past cycles, potentially leading to additional declines. Benjamin Cowen, the founder of IntoTheCryptoverse, provided an in-depth analysis that highlights a comparison between Ethereum’s wedge formation in 2019 and 2024.
Cowen suggests that Ethereum might experience a breakdown similar to 2019, potentially leading to a fresh bottom.
Ethereum’s Wedge Formation in 2019 and 2024
For context, in 2019, Ethereum formed a wedge pattern, where prices steadily made higher lows. Key levels noted include $81.21, $102.65, $149.31, and $191.37.
The wedge structure preceded a significant decline, with Ethereum falling back into the pattern before the Federal Reserve’s first rate cut in 2019. Following the rate cut, Ethereum dropped below the wedge, which led to further price declines before the ETH/BTC pair bottomed out. This marked the end of the downtrend, with Ethereum beginning a new upward trend after that.
Fast-forwarding to 2024, Ethereum has formed another wedge, albeit with significantly higher lows compared to 2019, according to Cowen’s analysis. The current cycle has seen lows at $886, $1,069, and $1,515, with the most recent level near $1,954.
Interestingly, Ethereum has fallen back into the wedge ahead of the anticipated 2024 rate cut, mirroring the 2019 pattern. This similarity suggests that Ethereum may break down below the wedge once again, potentially leading to further downward pressure.
Predictions of Further Downside Pressure
Benjamin Cowen has projected that Ethereum could see a fresh bottom near $1,200 by December 2024. This prediction is based on historical data from 2016 and 2019, where Ethereum experienced a 70% drop following similar market conditions.
Cowen highlights the potential for Ethereum to reach a similar risk. He suggests that the $1,200 level could represent a soft landing for Ethereum before the market turns upward in the first half of 2025.
Notably, ETH currently trades at $2,342; a drop to $1,200 would amount to a significant 48% crash.
Selling Pressure on ETH
Recent whale activities have added to the bearish sentiment surrounding Ethereum. On-chain data reveals that a foundation wallet recently transferred ETH valued at approximately $2.38 million to a multi-signature wallet.
Notably, this activity follows a previous transfer of 35,000 ETH worth over $94 million from the Ethereum Foundation to the Kraken exchange. The Ethereum Foundation’s continuous offloading of ETH tokens has fueled worries about the potential impact of these sales on the market’s future direction.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
