Ethereum price ‘bear flag’ could sink ETH to $2K after 20% decline in three weeks

Ethereum’s native token Ether has fallen by almost 20% over the past three weeks and hit monthly lows of $2,900 on April 19. Technicals indicate that there is more downside in the near future, even though it has rebounded above $3,000, as per a bearish pattern.

Setup of the ‘bear flag for Ethereum’ price indicator

The “bear flag” signal is a continuation signal that indicates a bearish trend. It appears when the price consolidates higher within an ascending parallel channel following a strong downtrend (called the flagpole). After the price moves out of the channel, it will resolve.

ETH’s price fell after it tested its bear flag’s top trendline on April 4. Now, the price is expected to continue its decline towards its lower trendline of $2,700. If the pattern holds true, the price may drop further. The target is at the flagpole’s height as shown in this chart.

Daily price chart for ETH/USD featuring the ‘bear flag setup. Source: TradingView

Ether’s bear-flag setup is at risk of a potential retest in the second quarter of $2,000

ETH price: macro factors

In recent months, Ethereum’s relationship with Bitcoin and other traditional markets has increased its downside risk.

In April 2019, Ether’s correlation coefficient with Nasdaq 100 was 0.95. A coefficient of 1 indicates that the assets are in perfect sync.

Daily chart showing the correlation coefficient of ETH/USD and Nasdaq100 Source: TradingView

Since the beginning of 2022, Ether has fallen by almost 19%. As investors evaluate the Federal Reserve’s willingness and capacity to raise rates aggressively and reduce its $9 trillion debt, Bitcoin, stocks, and other more risky markets have all fallen.

Bullish factors for the long-term

ETH’s decline is largely due to the sentiment that less money would be available to buy riskier assets.

Related: How Ether options traders can prepare for proof-of-stake migration

Speculators are optimistic about a long-term uptrend despite the fact that “The Merge,” the much-anticipated protocol update, is likely to be released in June.

DoopleCash, an independent market analyst added: “ETH is still feeling selling pressure from people who wanted to make a quick buck with the Merge.”

“At some point in time, we will find equilibrium. I don’t want to predict this bottom. I just want as much as possible before we get there.”

In addition, the months leading up to the technical update coincided with a decline in Ether held on exchanges, the number non-zero addresses climbing and more ETH flowing into Merge’s smart contract.

With a -2.8% increase in supply per year after Merge, #ethereum is expected to burn approximately 3.3 million ETH each year. The total ETH supply by the end of this decade will be less than 100 million. Or, to put it another way, all ETH currently on exchanges !!!! will be burned. pic.twitter.com/zqr54TGCzC
Lark Davis (@TheCryptoLark), April 6, 2022

Analyst at Seeking Alpha Kennan Mell argues that Ethereum’s practice of running shadow forks before the Merge launch increases its chance of success upon launch. This should encourage more investors to acquire Ether, particularly those who are sitting on the sidelines.

com. You should do your research before making any investment or trading decision.

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Eileen Wilson

Eileen Wilson –Technology and Energy My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.

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