The popular cryptocurrency Ethereum (ETH) has fallen by almost 20% over the past three weeks, reaching a monthly low of about $2,900 on April 19. However, despite the fact that it later recovered above $3,000, the methods suggest that a further decline in comparison with the classics is possible in the short term.
Ethereum (ETH) This metric is enabled
A bearish continuation signal, called a “bear flag”, appears when the price consolidates upwards within an ascending parallel channel after a strong downward movement (called a flagpole). After the price breaks through the channel, it starts a downward movement to fall further.
The price of ETH fell after testing the upper trend line of the bearish flag on April 4 and now there is a prolonged decline towards the lower trend line around $2,700. If the pattern opens as we would like, the price may fall further, and the target length will be equal to the height of the flagpole, as shown in the chart below.
As a result, the installation of the Ethereum bear flag represents a potential risk of testing to the level of $2,000 in the second quarter.
ETH Price: Macro factors
The correlation of Ethereum, the second largest cryptocurrency by market capitalization, with Bitcoin and areas of traditional markets has also increased downside risks in recent months.
For example, on April 19, the correlation coefficient between Ethereum and Nasdaq 100 was 0.95. A factor of 1 means that two objects move perfectly together.
On the other hand, the price of Ethereum has fallen by about 19% since the beginning of 2022. Meanwhile, bitcoin, stocks and other risky markets have also fallen this year as investors assess the Federal Reserve’s willingness to aggressively raise rates and shrink its balance sheet by $9 trillion.
Current status of Ethereum
The popular Ethereum altcoin (ETH) has fallen below the $3,000 level due to the downturn in the crypto money market in recent days. However, shortly after this fall, the popular altcoin managed to rise above the $3,000 mark again.
According to CoinMarketCap data at the time of writing, the leading Ethereum altcoin continues to trade at $3,041 with an increase of 4.26% over the past 24 hours.