Despite positive developments such as the launch of an Ethereum Spot ETF in the United States, the top altcoin has yet to reach new record highs.
Over the past week, ETH has actually experienced a 6.62% decline on the price charts. It is no surprise then that a cryptocurrency analyst is now anticipating a potential continuation of this downward trend, particularly as Ethereum looks to stabilize before a potential upward movement.
Descending triangle – Short-term dip possibly followed by significant surge
Based on a daily chart analysis by analyst Carl Runefelt, ETH is presently trading within a descending triangle pattern. This pattern often leads to a substantial bull run after a period of decline.
The ‘dip-to-surge’ pattern typically emerges when the digital asset hits its lowest point within the triangle, which is known as the support level. For ETH, this critical level seems to be approximately $2,200, a level that the analyst has highlighted on the chart, demonstrating notable buying pressure as well.
The analyst believes that if ETH bounces back from this support level, it could witness an 80.47% surge. This surge may potentially propel the altcoin to the $4,000 mark, with additional gains also appearing probable.
The analyst stated,
“Upon a breakout, there is a strong likelihood that #Ethereum could surge back to $4K.”
To validate the strength of the $2,200 support level, CryptoCrypto conducted its own analysis.
‘In-the-Money’ traders anticipated to spark the upturn
Using IntoTheBlock’s In and Out of Money Around Price (IOMAP) tool, CryptoCrypto’s analysis highlighted that the $2,200 range is a crucial area for buying interest, with significant asset holdings concentrated around this zone.
According to the IOMAP, a substantial support level resides at $2,218.93, where addresses hold over 1.59 million ETH in profit. This accumulation could exert considerable buying pressure should the price of ETH drop to this level.
Notwithstanding, the IOMAP also indicated that ETH might not descend as far as $2,218.93 before reversing course. There is a strong probability of a reversal around $2,281, where buyers hold a combined total of 1.01 million ETH over 2.17 million addresses.
In addition, the cumulative liquidation level delta from Hyblock unveiled a negative delta, suggesting a higher number of short positions in comparison to long positions, signaling a bearish market sentiment.
Possible further dip in store for ETH
Going a step further, CryptoCrypto’s analysis implied that ETH could be on the brink of another drop.
This assessment is supported by a noticeable decline in the OI-weighted funding rate from Coinglass. It decreased from 0.0043% on September 4th to 0.0023% at the time of publication.
The OI-weighted funding rate adjusts the funding rate based on the asset’s Open Interest, indicating that retail investors might be inclined to drive down the price of ETH.
If this downward trend persists, a descent to the $2,200 support region could become increasingly probable.