The latest ETH price crash has triggered a bearish continuation setup, with an intermediate downside target 20% lower than current prices.
Ether (ETH), the native token of the Ethereum network, fell on the last day of Q2 2022, trading in sync with riskier assets amid lingering fears of higher inflation and rising interest rates. Besides, it could lead to further declines for the third quarter.
ETH price downside breakout
The price of ETH plummeted almost 5% this June 30, to USD 1,044, after a four-day losing streak. The ETH/USD pair has also broken below its intermediate rising trendline support, which in conjunction with an upward horizontal trendline resistance, constitutes an “ascending triangle” pattern.
Ascending triangles are bearish continuation patterns when they occur after a strong downtrend. Therefore, the breakout of an ascending triangle usually results in the price falling further, usually by as much as the maximum height of the structure.
Ether has been trending inside an ascending triangle since June 13, breaking below the triangle’s lower trend line on June 29 – a move that accompanied a spike in trading volumes, confirming the conviction of traders on a further downtrend.
As a result, ETH’s Q3 downside target, led by the ascending triangle setup, comes in close to $835, almost 20% below the current price.
Exchange Reserves Increase
The bearish technical outlook is also fueled by an upward trend in the number of ETH on exchanges.
Notably, investors have deposited around 1 million Ether tokens across all cryptocurrency trading platforms since May 2022, according to data from CryptoQuant. As the number of ETH increases in exchange wallets, it indicates increasing selling pressure in the Ether market.
Institutional investors have also been limiting their exposure to Ether by withdrawing capital from dedicated investment funds, as noted by CoinShares in its weekly report.
Ether-focused investment products have seen outflows worth $136.9 million in June. So far in 2022, they have processed around $450 million in withdrawals, confirming that traditional investors are very bearish on ETH.
ETH Sharks and Whales Buy the Dip
The silver lining is that Ether’s price decline throughout June has provided some of its wealthiest investors with an opportunity to “buy the dip.”
“Ether shark and whale addresses (holding between 100 and 100,000 ETH) have collectively added 1.1% more to the coin supply in this -39% drop [since June 7],” Santiment noted, a cryptocurrency-focused data analytics platform, adding that, “Historical evidence points to this group of levels having a lot of faith in future price movement.”
Additionally, smaller investors have also shown a similar buying sentiment, with addresses holding at least 0.1, 1 and 10 ETH steadily increasing since the end of last year, data from Coinglass shows.
The price of Ether is down almost 75% so far this year.
By Audy Castaneda
