Ethereum Faces Growing Downside Risk as Technical Patterns Signal Further Decline
Ethereum's price has recently shown signs of significant weakness, entering a classic 'Inverse Cup and Handle' breakdown phase. If this pattern fully plays out, the target price could reach around $1,665, representing approximately 25% downside from current levels.
Looking at the price action, ETH broke below the critical neckline around $2,960 in January. Although it attempted a rebound, it failed to reclaim this level. Additionally, the price has been unable to move back above the 20-day and 50-day EMAs, which have now turned into major resistance zones. Multiple technical indicators aligning further reinforce expectations for continued weakness in the near term.
On-Chain Metrics Also Suggest Bearish Outlook
On-chain metrics also paint a bearish picture, as MVRV extreme deviation zones indicate Ethereum could potentially fall toward $1,725, with even lower levels not out of the question. Historically, ETH has often only begun forming a bottom and entering a recovery phase after touching or breaking below the MVRV lower band.
Macro Environment Adds to the Selling Pressure
On the macro front, investor appetite for riskier assets like cryptocurrencies is waning, with some traders fearing a broader market correction similar to the historical 'four-year cycle' could unfold by 2026.
Besides, growing concerns that the 'AI bubble' may soon burst have also led capital to move away from high-beta assets, further increasing downside pressure on ETH.