Ethereum token Ether (ETH) could be entering a “bull trap” zone after bouncing above $1,000 from 18-month lows of $885.
The price of Ether traces a “rising wedge”
The first of these indicators is a “rising wedge”, a classic bearish reversal setup that forms after price trends higher within a range defined by two rising but converging trendlines.. The wedge setup is further confirmed if trading volume drops along with rising prices.
Theoretically, a rising wedge resolves after price breaks below its lower trendline and sees a decline to the level of length equal to the maximum height between the upper and lower trendline of the wedge.
Ether has been forming a rising wedge since mid-June, as shown in the chart below.
Therefore, its interim bias looks to the downside, with a decisive break below the lower trendline risking a decline towards $870-$950, depending on where the break starts.
That means a 15%-25% decline from the current price of ETH.
$70 million leaves Ethereum funds
Ethereum’s bearish case is supported by evidence of significant outflows from investment funds.
In particular, Ether-related investment products saw $70 million worth of outflows in the week ending June 17according to data obtained by CoinShares.
This is the eleventh consecutive week of capital withdrawals, bringing total outflows so far this year to USD 458.6 million.
Instead, Solana (SOL), one of Ethereum’s main rivals in the smart contract ecosystem, attracted $109 million in 2022 for its related funds. While Bitcoin (BTC) saw $480 million flow into its investment products.
CoinShares cited investor concerns about Ethereum’s “merge” to proof-of-stake as the main reason behind its funds’ poor performance this year.
Ethereum Options Strike Price: $1,000
ETH options open interest on Deribit shows over $1 billion in notional for Ether, awaiting expiration on June 24. Curiously, these Ether options are big puts around current price levels, with a concentration around the $1,000 strike, according to data from Coinglass.
The June 24 expiration could influence Ether’s price action, mainly because it is trading just 10% above the preferred strike price of $1,000. Also, a move towards $1,000 could trigger the rising wedge setup.
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