Ethereum, the second-largest cryptocurrency by market capitalization, might be poised for further declines if a key pattern on its chart is validated.
Technical analysis shows that Ethereum has formed a head-and-shoulders pattern, indicating additional losses with a potential downside price of $1,100. Taken from the current price, this represents a more than 30% drop.
Ethereum’s Bollinger bandwidth is nearly the narrowest among the data that Bloomberg has gathered going back to 2018. The bandwidth in a Bollinger analysis, a common method of determining volatility, is the distance between the upper and lower bands.
A tight Bollinger bandwidth is frequently interpreted by technical analysts as a sign that an asset may see volatility. Ethereum has also crossed the lower band, indicating that an increase in volatility may result in losses as opposed to gains.
Ethereum plunged to lows of $1,542 on Aug. 17 as the crypto market fell. Although the crypto asset has recovered somewhat, ETH presently trades in the range of $1,581 to $1,699. ETH was down 1.25% in the last 24 hours to $1,642 at the time of writing.
According to on-chain analyst Ali, a drop below the $1,600–$1,550 level for ETH could set the stage for a massive 37%-45% correction, with a target of $1,000.
ETH on the move
In another tweet, Ali reported that large Ethereum holders with more than 10,000 ETH had been reshuffling since February, citing Glassnode statistics. He stated that about 112 whales have altered their portfolios, either selling or redistributing their ETH.
According to data from Ethereum network explorer Etherscan, Ethereum cofounder Vitalik Buterin deposited 600 Ethereum worth around $1 million to Coinbase on Monday.
Another inactive Ethereum address that purchased ETH during Ethereum’s initial coin offering (ICO) in 2014 also transferred 191 ETH worth around $320,000 to another address on Aug. 20.
