Ethereum’s native token Ether (ETH) continues to face downside risks in a higher interest rate environment. But one analyst believes the token’s upcoming sell-off move could turn into a bear trap as the market factors in the possible launch of Merge next August.
ETH at $4,000?
Ether price could hit $4,000 by the end of 2022, according to a technical setup shared May 20 by Wolf, an independent market analyst.
The analyst expects ETH to trade within a multi-month ascending triangle pattern, comprising horizontal trendline resistance and ascending trendline support.
In particular, ETH’s latest retest of the structure’s lower trendline could start a big bounce back towards its upper trendline, which sits around the $4,000 level, as shown below.
Wolf took his bullish signals from a similar triangle setup from 2016, the formation of which preceded a major bull run from $1 to $27. Similarly, Another ascending triangle occurrence in 2017 coincided with a bullish follow-through, in which the ETH/USD pair surged 270% to over $1,500.
The “death spiral” of low liquidity vs. merge
Wolf’s fractal-based analysis came as Preston Van Loon, one of Ethereum’s core developers, confirmed that the long-awaited upgrade of the blockchain project to a proof-of-stake consensus mechanism would come sometime in August. .
wolf he pointed that Ethereum was preparing a “bear trap”, which would make sense before the upgrade, complementing its technical setup, as discussed above.
Bear trap few months from the #merge makes sense. $ETH
— Wolf (@IamCryptoWolf) May 20, 2022
The bearish trap a few months after Merge makes sense
The pending upgrade was one of the key catalysts behind Ether’s 2021 price rally, as many investors believed it would improve the long-standing scalability issue on the Ethereum blockchain, while lowering gas and transaction costs. . However, the Ethereum Foundation kept delaying the launch.
“Without a doubt, this lack of progress has played a significant role in the recent Ethereum price decline,” noted Bitfreedom Research, a cryptocurrency and technology research entity, while predicting that the price of ETH would decline towards $950 – USD 1,900 for October 2022.
The firm cited higher interest rates as the main reason behind its bearish outlook for Ethereum, noting:
“The crypto market moves extraordinarily fast, which means that crypto businesses need a LOT of cash to fuel rapid growth. With no cash available, this may lead the ERC20 Ethereum token economy into a death spiral.”
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.
Keep reading:
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the full amount invested may be lost. The services or products offered are not aimed at or accessible to investors in Spain.