The latest ETH plunge has triggered a bearish continuation setup, with an interim downside target 20% below the current prices.
Ethereum's native token Ether (ETH) fell on the final trading day of Q2/2022, trading in sync with riskier assets amid persistent fears of higher inflation and rising interest rates. And it could result in further declines heading into Q3.
ETH price breakdown underway
ETH's price plunged nearly 5% this June 30 to $1,044 following a four-day losing streak. The ETH/USD pair has also broke below its interim rising trendline support, which in conjugation with a horizontal trendline resistance to the upside, constitutes an "ascending triangle" pattern.
Ascending triangles are bearish continuation patterns when they occur after a sharp downtrend. Therefore, a breakdown out of an ascending triangle typically results in the price falling further lower, typically by as much as the structure's maximum height.
Ether had been trending inside an ascending triangle since June 13, breaking below the triangle's lower trendline on June 29 — a move that accompanied a spike in trading volumes, confirming traders' conviction about a further downtrend.
As a result, ETH's downside target in Q3, led by the ascending triangle setup, comes to be near $835, almost 20% lower than today's price.
Exchange reserves are rising
The bearish technical outlook is also boosted by an uptrend in the number of ETH on exchanges.
Notably, investors have deposited around 1 million Ether tokens across all crypto trading platforms since May 2022, according to data from CryptoQuant. As the amount of ETH rises in exchanges' wallets, it indicates a growing selling pressure in the Ether market.
Institutional investors have also been limiting their exposure in Ether by withdrawing capital from the dedicated investment funds, CoinShares noted in its weekly report.
Ether-focused investment products have witnessed $136.9 million worth of outflows in June. In 2022 so far, they have processed circa $450 million in withdrawals, confirming that traditional investors are very bearish on ETH.
ETH sharks and whales buy the dip
On the bright side, the decline in Ether's prices across June has provided some of its richest investors the opportunity to "buy the dip."
Related: 'Can't stop, won't stop' — Bitcoin hodlers buy the dip at $20K BTC
"Ethereum shark and whale addresses (holding between 100 to 100K $ETH) have collectively added 1.1% more of the coin's supply to their bags on this -39% dip [since June 7]," noted Santiment, a crypto-focused data analytics platform, adding:
"Historical evidence points to this tier group having alpha on future price movement."
Additionally, smaller investors have also been showing a similar dip-buying sentiment, with a consistent increase in addresses holding at least 0.1, 1, and 10 ETH since the end of last year, data from Coinglass shows.
Ether's price is currently down nearly 75% year-to-date.
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