Ethereum Price Risks 'Bear Flag' Crash, Drops 20% Against Bitcoin
Since December 2021, Ethereum's native token ether (ETH) has fallen nearly 40% against bitcoin (BTC). But based on a classic technical indicator, the ETH/BTC pair could be in for more pain in the coming weeks.
From a technical perspective, the price of Ethereum is at risk of crashing
Since early June 2022, the ETH/BTC chart has formed a bearish flag on a three-day time frame.
Specifically, a bear flag is considered a bearish continuation pattern that consolidates within a range defined by two rising parallel trendlines after a sharp price drop. They disappear when the price breaks below the lower trendline (i.e. in the direction of the previous downtrend).
As a rule of technical analysis, the downside target length of a bearish flag is equal to the size of the previous downside move. Recently, ETH/BTC has seen a similar crash with profit targets around 0.0439, down almost 20% from today’s price.
The three-day price chart of ETH/BTC presents a "bear flag" pattern. Source: TradingView
Nonetheless, research by the Samurai Trading Academy shows that the average bearish flag has a success rate of about 67% in achieving profit goals. Also, according to senior analyst Tom Bulkowski, the bear flag has hit its target only 46 times out of 100 attempts.
looks like "real death"
Another technical report shared by analyst Pentoshi shows that ETH is facing the possibility of falling well below the bear flag’s profit target.
According to Pentoshi, ETH/BTC may fall to the rising trend line that has served as support since September 2019, which is near 0.036, a 30% drop from today’s price.
Moderate inflow of funds into Ethereum
The ETH/BTC bear market contrasts with a potential recovery for Ethereum investment funds.
According to a recent report from CoinShares, Ethereum funds raised a cumulative $7.6 million in the week ending July 8.
Net USD inflows/outflows to crypto funds (by assets). Source: CoinShares/Bloomberg
“After 11 consecutive weeks of outflows that peaked at $460 million in 2022, inflows point to a modest improvement in market sentiment,” the report states.
The report also states:
“This improvement in sentiment may be due to the growing likelihood of an Ethereum merger. Ethereum will move from Proof of Work to Proof of Stake later this year.”