The second-largest cryptoasset by market cap, Ether (ETH), has continued in a downtrend since the launch of spot Ethereum exchange-traded funds (ETFs) in the United States. ETH’s downtrend further worsened in early August amid rumors of global recession which saw trillions of dollars wiped out across the U.S. and Japan stock markets.
In particular, ETH price plummeted to the $2,112 level on 5 August 2024, marking its eight-month low. Following a brief recovery in the broader crypto market as the U.S Securities and Exchange’s (U.S SEC) XRP lawsuit against Ripple Labs finally ended, ETH price surged to $2,750 on 12 August.
However, the relief rally encountered stiff resistance from the supply congestion zone at $2,800. This led to the downward retracement to its current price of $2,571 at the time of writing. Citing multiple factors and technical indicators, several crypto analysts say ETH still faces downside risks.
Multiple analysts believe ETH is likely to reach new lows near $1,600.
Among those who recently shared their price analysis for ETH is Peter Brandt. Presenting two chart patterns—a 5-month rectangle and a rising wedge—the legendary crypto trader predicted two possible price actions for ETH in the coming days or weeks.
According to Brandt, the 5-month rectangle pattern showcased the possibility of ETH price gaining momentum to reach $2,950, presenting an opportunity for traders to take profits or exit their long positions.
Meanwhile, the rising wedge pattern indicated that ETH could slip below the support trendline of the wedge. If this happens, Brandt predicted a deeper correction in ETH price to $1,645.
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McKenna, General Partner at the multi-strategy digital asset fund Arete Capital, shared a similar view in a Thursday X post. The crypto analyst noted that ETH is currently trading close to the supply zone at $2,800, a price region where traders are more likely to bet on shorts than longs. Notably, ETH is changing hands at $2,600 at the time of writing.
“I don’t really expect ETH to break above $2800–2900 but rather remain range bound for August and some of September,” McKenna wrote. According to his analysis, ETH is likely to retest $2,140 and then rebound to levels near $2,200.
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Ethereum’s funding rates remain negative.
Another key factor signaling a potential decline in ETH price is Ethereum’s funding rates on the derivatives market. According to Glassnode data, Ethereum’s funding rates stayed positive from January 2024 until the massive crypto market correction in early August.
The correction, which saw ETH hitting $2,100, also caused the cryptoasset’s funding rates in the derivatives market to turn negative, indicating bearish sentiments.
A negative funding rate often sets in when the perpetual contract price is lower than the spot price. It indicates that short positions are paying long positions. Ethereum’s funding rates and price decline point to bearish shift,” one analyst commented.
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Ndianabasi Tom A crypto journalist and content writer who has been talking about cryptocurrency and blockchain technology since 2018, Ndianabasi is a Writer at Crypto Asset Buyer (CAB).
