Red alert as Ethereum price forms several dangerous patterns

Ethereum (ETH) has lagged behind Bitcoin (BTC) in 2024, up only 20% compared to Bitcoin’s 50% rise. This underperformance is partly due to slow growth in Ethereum ETFs and competition from other blockchains.

Bearish Technical Indicators for Ethereum

• Double-Top Pattern: Ethereum formed a double-top around $4,000 and dropped below $2,824, confirming a bearish breakout.
• Death Cross: The 50-day Hull Moving Average (HMA) crossed below the 200-day HMA, signaling bearish momentum, similar to March 2022 when Ethereum dropped over 70%.
• Bearish Pennant: Ethereum is forming a bearish pennant pattern at the 50% Fibonacci retracement level, increasing the chances of a breakout to the downside, with the next target at $2,111.

Ethereum’s weak fundamentals

In addition to weak technical performance, Ethereum is also grappling with significant fundamental challenges. One key issue is that Ether ETFs have not seen substantial inflows, even several months after their launch. According to SoSoValue, these funds have experienced cumulative outflows exceeding $530 million, primarily due to the Grayscale Ethereum Fund. In comparison, Bitcoin ETFs have attracted over $20 billion in inflows, signaling stronger demand from institutional investors.

Ethereum is also facing fierce competition in areas it once dominated, such as DeFi and NFTs. Data from DeFi Llama reveals that Solana has recently surpassed Ethereum in terms of decentralized exchange (DEX) volume over the past week. Solana processed $10.87 billion, compared to Ethereum’s $9.69 billion. If this trend continues, Solana could overtake Ethereum in volume this month. To date, Solana has handled $23.9 billion, slightly trailing Ethereum’s $24 billion.

This surge in Solana’s performance is largely driven by the rising popularity of meme coins like Dogwifhat, Bonk, and Popcat, which have attracted significant attention from traders. All Solana-based meme coins have collectively gained over $10 billion in market capitalization. Additionally, several high-profile Ethereum whales, including Vitalik Buterin and the Ethereum Foundation, have recently sold thousands of coins, adding to the downward pressure on the network.

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