Ethereum’s price continues to plummet and has established an inverse cup and handle pattern, indicating a possibility of further declines toward a historic low.
Ethereum (ETH) has witnessed a decline for three weeks in a row, currently resting at its lowest point since January 2020 in relation to Bitcoin (BTC). The ETH/BTC pair has dropped to 0.019, which represents a decline of over 80% from its peak in December 2021.
ETH has retreated from its peak of $4,000 last year to below $1,500, while its market cap dominance has decreased by 67% from the highs of 2021 and is nearing levels seen in 2022.
The ongoing downturn commenced in September 2022 following the execution of The Merge, which transitioned Ethereum to a proof-of-stake consensus model. This upgrade was aimed at enhancing scalability, efficiency, and sustainability, bringing Ethereum closer in line with networks like Solana (SOL) and Avalanche (AVAX).
Nevertheless, Ethereum is grappling with increasing challenges. The reception of spot Ethereum ETFs on Wall Street has been lukewarm, accumulating inflows of less than $2.6 billion. In total, ETH ETFs manage just $4.9 billion in assets—compared to the $85 billion in Ethereum investment funds—indicating that many investors still prefer Bitcoin as a safe haven.
Moreover, Ethereum faces mounting competition within its own layer-2 ecosystem, encompassing Base, Arbitrum, Polygon, and Optimism. Data shows that decentralized exchanges (DEXs) on Ethereum processed $57.9 billion in volume over the last 30 days, while layer-2 networks managed over $35 billion in the same timeframe.
Additionally, Ethereum has become a less lucrative chain in 2024, as its fee revenue falls behind that of competitors such as Tron, Solana, and Jito.
Ethereum’s price may drop to an all-time low
The weekly charts indicate that ETH has been in a prolonged downtrend against Bitcoin. A death cross, which occurs when the 50-week and 200-week moving averages converge, formed in May of last year, reinforcing bearish momentum.
Recently, ETH has developed an inverse cup and handle pattern, a classic bearish continuation signal. This formation generally features a rounded top followed by a horizontal support level, suggesting a potential further breakdown.
The Average Directional Index has climbed to 44, signaling that the current downtrend is gaining momentum. Based on the depth of the cup, technical analysis indicates that ETH could drop to an ETH/BTC pair of 0.0025, approaching its all-time low.