In the last month, Ethereum [ETH] has faced challenges, witnessing a decrease of 12.08% in its valuation. Despite a brief 2.69% recovery last week, this positive momentum appears to be waning.
By examining chart patterns and the prevailing market sentiment—emphasized by a spike in ETH inflows to trading platforms—the recent 0.35% drop over the past 24 hours may potentially continue descending.
Emergence of a Bullish Formation, with a Twist…
Analyst Ali Charts points out that Ethereum is currently forming an inverse head-and-shoulders pattern on the daily chart. This structure includes a left shoulder, a head, and a right shoulder.
The inverse head-and-shoulders pattern is a common bullish formation, typically indicating an extended period of price consolidation before a notable upward movement.
Currently, ETH is in the process of shaping the right shoulder of this pattern, mirroring the left shoulder by following a downward trend along a descending line. If this pattern continues, ETH might see a further decline towards the $2,800 level.
Once reaching this point, a consolidation period similar to the left shoulder, possibly lasting up to 37 days, might occur before breaching the descending resistance line.
Successful completion of this pattern could propel ETH towards its initial major resistance range between $3,850 and $4,100. Subsequently, ETH could set its sights on achieving a new all-time high, potentially surpassing the $6,750 threshold, as indicated in the analysis.
CryptoCrypto also mentioned that the current market sentiment indicates a significant downside risk for ETH in the near future.
Increasing Exchange Supply Might Spark ETH’s Decline
The abundance of ETH on crypto exchanges has been steadily growing, raising worries about potential pricing stress.
On January 15th, the quantity of ETH held on exchanges notably increased from around 19,164,848 to 19,214,253 ETH at the present moment—a rise of 49,405 ETH.
This upsurge in exchange-held assets typically indicates mounting selling pressure, suggesting traders might be gearing up to unload their assets.
Exchange netflow data, which monitors the balance of inflows and outflows on exchanges, supports this perspective.
In the last 24 hours, ETH registered a positive netflow of approximately 47,761 ETH. This pattern implies a probable surge in market sell-offs that could potentially drive the price of ETH lower.
If the selling pressure persists, ETH could move towards the $2,800 region, as hinted by recent chart indications.
Institutional Selling Introduces Additional Pressure
Institutional investors have played a role in increasing the selling pressure on ETH, with World Liberty Finance taking the lead by transferring a considerable amount of Ethereum to exchanges.
In their recent activity, World Liberty Finance shifted 1,038 ETH—valued at $3.44 million—into Coinbase, reducing their total ETH holdings to 5,111 ETH, valued at around $17.21 million.
This action follows a larger transaction over the past two days, where the same institution deposited 18,536 ETH into Coinbase. These cumulative transfers indicate a potential strategy of selling, which could heighten the downward pressure on ETH’s price if executed.
As institutions adjust their positions and the delicate market sentiment persists, ETH’s price might encounter further declines in the short run.