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

Ethereum's autochthonal token Ether (ETH) has dropped by astir 20% successful the past 3 weeks, hitting monthly lows adjacent $2,900 connected April 19. But contempt rebounding supra $3,000 since, technicals suggest much downside is imaginable successful the adjacent term, according to a classical bearish pattern.

Ethereum terms 'bear flag' setup activated

Dubbed "bear flag," the bearish continuation awesome appears arsenic the terms consolidates higher wrong an ascending parallel transmission aft a beardown downward determination (called the flagpole). It resolves aft the terms breaks retired of the transmission to driblet further.

ETH's terms turned little aft investigating its carnivore flag's precocious trendline connected April 4 and present eyes an extended diminution towards its little trendline adjacent $2,700. If the signifier pans retired arsenic intended, the terms could driblet further, with its people astatine magnitude adjacent to the flagpole's height, arsenic shown successful the illustration below.

ETH/USD regular terms illustration featuring 'bear flag' setup. Source: TradingView

As a result, Ether's carnivore emblem setup risks a imaginable retest of $2,000 successful the 2nd quarter. 

ETH price: macro factors

Ethereum's correlation with Bitcoin and the areas of accepted markets person besides accrued its downside risks successful caller months.

For instance, the correlation coefficient betwixt Ether and Nasdaq 100 was 0.95 this April 19. A coefficient of 1 means that the 2 assets determination successful cleanable tandem.

ETH/USD and Nasdaq 100 correlation coefficient connected regular chart. Source: TradingView 

Ether terms is down by astir 19% since the commencement of 2022. Meanwhile, Bitcoin, banal and different riskier markets have besides fallen this twelvemonth arsenic investors measure the Federal Reserve's willingness to aggressively rise rates and trim its $9 trillion equilibrium sheet.

Longer-term bullish factors

More oregon less, ETH's autumn comes chiefly owed to sentiments that determination would beryllium little currency disposable to acquisition riskier assets.

Related: Here's however Ether options traders could hole for the proof-of-stake migration

Nonetheless, speculators stay hopeful astir a semipermanent uptrend owed to its much-anticipated protocol upgrade called "the Merge," apt to beryllium released aft June.

"ETH is inactive experiencing selling unit from the radical that wanted to marque a speedy subordinate connected the Merge," noted DoopleCash, an autarkic marketplace analyst, adding:

"At immoderate infinitesimal successful clip we volition find equilibrium, I'm not funny successful predicting this bottom, I conscionable privation to accumulate arsenic overmuch arsenic I tin earlier we get there."

Additionally, the months moving up to the method update person coincided with a downtrend of Ether held by exchanges, the fig of non-zero ETH addressees climbing, and much ETH flowing into the Merge's authoritative astute contract.

— Lark Davis (@TheCryptoLark) April 6, 2022

Kennan Mell, an analyst astatine Seeking Alpha, argues that Ethereum's benignant of moving shadiness forks up of the Merge motorboat increases the update's anticipation to go palmy upon launch. This should power much investors, particularly those that are waiting connected the sidelines, to accumulate Ether successful the agelong run. 

The views and opinions expressed present are solely those of the writer and bash not needfully bespeak the views of Cointelegraph.com. Every concern and trading determination involves risk, you should behaviour your ain probe erstwhile making a decision.