ETH Could Face 'Brutal' Plunge if Critical $2K Level Fails, Traders Caution
The price of Ether could tumble toward the $1,000 level should a bear flag pattern breach the $2,000 support zone, driven by diminishing whale buying activity and escalating selling momentum.
Technical analysts in the cryptocurrency space are warning that the price of Ether (ETH) could potentially plummet to the $1,000 level should a bearish technical pattern confirm a breakdown.
Key takeaways:
- The bear flag formation on Ether charts points to a potential 50% price collapse to $1,075.
- More than $1.70 billion in long position liquidations could occur if Ether drops beneath the $2,000 threshold.
- Large-scale holders are showing signs of reduced accumulation as they decrease their ETH positions.
Bear flag pattern points to $1,000 price level for Ether
The downward momentum for Ether could intensify should the cryptocurrency's value fall beneath the bear flag's lower boundary at the $2,000 mark on daily price charts, reminiscent of a similar pattern breakdown in January that resulted in a 41.5% price decline for ETH.
The bear flag represents a technical chart pattern that signals bearish continuation, typically emerging when price action consolidates within an upward-sloping channel after experiencing a steep downward move.
Based on the flag's measured projection, calculated by adding the preceding downtrend's height to the $2,000 breakdown level, the technical target sits at $1,075, representing a 49% decline from present price levels.
"$ETH is about to break the bear flag pattern," analyst Coin Signals said in a Monday post on X, adding that if the price fails to hold above the lower trend line at 2,000, a "sell-off to $1800 or a new low" would follow.
Another market analyst, Keith Alan, advised his audience to get "prepared for the nasty scenario," which would involve the confirmation of a death cross between the 21-day simple moving average (SMA) and 50-day SMA, and validation of a bear flag in the daily time frame.
"Momentum indicators also show deterioration on both daily and weekly RSI timeframes," the analyst said in a recent article on X.
"Failure to establish support, however, opens the door to a sequence of progressively lower technical support levels" toward the measured target of the bear flag structure around $1,300, he added.
Another technical analyst, Crypto Patel, indicated that ETH's confirmation of a rising wedge formation was in progress, pointing to a downward price objective of $1,500.
"Ethereum has lost a key rising trendline. As long as the price stays below it, weakness can continue."
At the same time, data monitoring Ethereum's liquidation levels reveals that a price drop beneath the $2,000 support would lead to more than $1.70 billion in forced liquidations of leveraged long ETH positions across cryptocurrency exchanges, based on information from CoinGlass data.
Major Ethereum holders reduce accumulation activity
The recent price recovery of Ether to the $2,400 level failed to spark widespread buying activity among significant wallet size categories, as evidenced by data from Glassnode.
Specifically, the count of mega-whale addresses controlling more than 10,000 ETH has experienced a significant decrease to a 10-month low of 1,050, while the 30-day change has plummeted to as low as -70, marking levels not witnessed since early February.
Put differently, major market participants are capitalizing on the recent liquidity to reduce their risk exposure, indicating a deficiency in medium-term market confidence.
The trend appears consistent among wallet holders with smaller balances.
Ethereum addresses containing between 1,000 and 10,000 ETH have similarly experienced a downward trajectory, dropping to a nine-month low of 4,750 on May 8. The 30-day metric continues to show negative movement, remaining around -50 as of the current reporting time.
Collectively, these metrics point to continued distribution patterns and weakening confidence among critical ETH holder segments, amplifying the possibility of a more substantial price decline should the $2,000 support level fail to hold.
This decrease in the number of whale addresses corresponds with the recent trend of cryptocurrency flowing into exchanges, suggesting that the trajectory of minimal resistance continues to point downward in the near term as selling pressure intensifies.