Ethereum price has formed a death cross pattern, risking further downward momentum as whales continue selling.
Ethereum (ETH) dropped to $2,600 on Thursday, down by over 35% from its highest level in December last year.
This decline happened the network continued to see weak demand among investors. Spot Ethereum exchange-traded funds had net outflows of $40.95 million on Wednesday, bringing the cumulative inflows to $3.1 billion.
There are signs that some Ethereum whales have continued to dump their tokens. According to Lookonchain, one big whale deposited 20,000 tokens worth $52.8 million to Kraken. The same whale sold 20,000 tokens in January and now has tokens worth $134 million remaining.
Whale selling is often seen as a negative catalyst for a cryptocurrency as these investors are seen as being more experienced and sophisticated.
Ethereum has also continued to lose market share in key areas. For example, TokenTerminal data shows that this year, Ethereum has earned $179 million in fees. It has been overtaken by other popular blockchain networks, such as Circle, Solana (SOL), Jito, Tron, and Tether.
Ethereum price forms a death cross pattern
There is a risk that the ETH price has more downside to go. It has formed a death cross on the daily chart as the 50-day and 200-day Exponential Moving Averages have crossed each other. This cross is one of the most bearish chart patterns in technical analysis. Ethereum slipped by over 20% when it formed a death cross in August last year.
The coin has also invalidated the formation of an inverse head and shoulders pattern when it crashed below $2,821, which would have been its right shoulder.
Ethereum has also formed a double-top chart pattern at $4,100, and whose neckline is at $2,140. Therefore, there is a risk that it will soon have a strong bearish breakdown.
The initial target of this price action will be at $2,140, the double top’s neckline about 20% below the current level. A drop below that level will point to more downside, potentially to $1,530, the lowest swing in November last year.
On the flip side, a rebound above the 200-day moving average at $3,090 will invalidate the bearish view and point to more upside.
