Ethereum’s performance has been on a downward trend in the last month, experiencing a decrease in value by 12.08%. Although there was a brief 2.69% increase last week, it appears that this positive momentum is waning.
Recent chart patterns and the prevailing market sentiment, indicated by a surge in Ethereum inflows to exchanges, hint at the possibility of a further decline following the recent 0.35% drop in the last 24 hours.
Emerging Optimistic Pattern with Potential Risks Ahead
Analyst Ali Charts has identified an inverse head-and-shoulders formation on Ethereum’s daily chart. This pattern includes a left shoulder, a head, and a right shoulder.
The inverse head-and-shoulders pattern is usually seen as a bullish indicator signaling a period of price consolidation before a notable upward movement.
The current formation of the right shoulder, mirroring the left shoulder with a downward price trend, suggests a possible drop in Ethereum’s value towards the $2,800 level.
Once reaching this point, Ethereum might consolidate for around 37 days before breaking through the descending resistance line as observed during the development of the left shoulder.
A successful validation of this pattern could propel Ethereum towards a key resistance area ranging from $3,850 to $4,100. Further advancements could see Ethereum setting a new all-time high, with the potential to surpass the $6,750 threshold as illustrated in the analysis.
CryptoCrypto has also pointed out the prevailing negative market sentiment that suggests Ethereum faces significant downside risks in the short term.
Impending Selling Pressure from Increased Exchange Supply
Exchange reserves of Ethereum have been steadily rising, which raises concerns about possible downward price movements due to increased selling.
On January 15th, the Ethereum supply on exchanges notably grew from around 19,164,848 to 19,214,253 ETH, indicating an increase of 49,405 ETH at the time of reporting.
Typically, a surge in assets held on exchanges implies mounting selling pressure as traders gear up to offload their assets into the market.
Analysis of exchange netflow data, which tracks the balance of inflow and outflow on exchanges, aligns with this negative outlook.
In the past 24 hours, Ethereum saw a positive netflow of about 47,761 ETH, hinting at a potential rise in market sell-offs that could drive Ethereum’s price downwards.
If this selling pressure continues, Ethereum’s value may decline towards the $2,800 mark, as supported by recent analytical patterns.
Institutional Activities Contributing to Price Pressures
Institutional investors are also adding to the selling pressure on Ethereum, with World Liberty Finance at the forefront by moving a substantial amount of Ethereum to exchanges.
In a recent move, World Liberty Finance transferred 1,038 ETH—equivalent to $3.44 million—to Coinbase, reducing its ETH holdings to 5,111 ETH valued at around $17.21 million.
This comes after a larger transaction in the previous two days involving the deposit of 18,536 ETH into Coinbase by the same institution. These cumulative transfers suggest a potential strategy to sell off assets, which might increase the downward pressure on Ethereum’s price if executed.
With institutions making adjustments to their positions and the fragile market sentiment, Ethereum’s value could face further declines in the immediate future.