Red alert as Ethereum price forms several dangerous patterns

Ethereum, the second-largest cryptocurrency, has lagged behind Bitcoin this year due to slow growth of its exchange-traded funds and competition from other layer 1 and layer 2 blockchains.

Ethereum (ETH) is up less than 20% in 2024, while Bitcoin (BTC) is up over 50%.

Technicals point to more Ether weakness in the coming months. On the weekly chart, the cryptocurrency formed a double-top chart pattern near $4,000. It confirmed the bearish trend in July when it broke below this pattern’s neckline at $2,824.

Ethereum has also formed a death cross pattern as the 200-day and 50-day Hull Moving Averages are bearish. HMA reduces latency by using weighted moving averages to smooth price data.

Ethereum’s last death cross on the weekly chart occurred in March 2022, and the cryptocurrency fell over 70% after that.

Ether also formed a bearish pennant chart pattern characterized by a long vertical line followed by a symmetrical triangle. Typically, an asset experiences a bearish breakout when the two lines of the triangle converge.

Additionally, this consolidation is occurring at the 50% Fibonacci Retracement level. Therefore, there are increasing chances that the cryptocurrency will enter a strong downtrend in the near term, with the next target being $2,111, its low point on August 5.

Ethereum price chart | Source: TradingView Ethereum’s weak fundamentals

In addition to weak technicals, Ethereum is also struggling with significant fundamental challenges. First, Ether ETFs have not seen strong inflows for several months after launch.

According to SoSoValue, there has been a cumulative outflow of over $530 million from these funds, primarily due to the Grayscale Ethereum Fund. In contrast, Bitcoin ETFs surpassed the $20 billion entry level, indicating increased demand from institutional investors.

Ethereum is also facing intense competition in areas where it used to dominate, such as DeFi and NFTs. Data from DeFi Llama shows that Solana has surpassed Ethereum in terms of DEX volume in the last seven days. It managed $10.87 billion compared to Ethereum’s $9.69 billion.

If the trend continues, Solana could surpass Ethereum this month. Solana has managed $23.9 billion so far, compared to Ethereum’s $24 billion.

This performance is largely due to the popularity of Solana (SOL) meme coins such as Dogwifhat, Bonk, and Popcat, which have become popular among investors. All of Solana’s meme coins have gained a market value of over $10 billion.

Additionally, some high-profile Ethereum whales, including Vitalik Buterin and the Ethereum Foundation, have recently sold thousands of coins.

Therefore, a combination of weak fundamentals and technicals could push Ether lower in the coming weeks.