Ethereum Forming 3 Risk Models, Potential 20% Decrease

Ethereum, the second-largest cryptocurrency in the market, dropped to $2,670 on Monday, down more than 35% from its peak in December. Its underperformance comes as it faces significant competition in the blockchain industry. Much of this competition comes from popular layer 1 networks such as Berachain, Solana, and BNB Smart Chain. Ethereum is also losing market share to layer 2 blockchains such as Base and Arbitrum, which have become popular due to lower fees. For example, DEX protocols on Ethereum have processed a trading volume of $81 billion in the past 30 days, while Base and Arbitrum have processed $35 billion and $28 billion respectively. Third-party data shows that Ethereum ETFs have not attracted as much capital inflow as expected. They have experienced outflows in the past two trading days, bringing the total accumulated amount to $3.15 billion. In contrast, Bitcoin ETFs have accumulated nearly $40 billion in inflows. The daily trading volume of Ethereum also continues to decrease, down to 126 billion dollars, lower than the peak of 330 billion dollars in December. Its revenue also continues to decline, down to 5 million dollars on Sunday, lower than the over 58 million dollars in November last year. Furthermore, Ethereum's future open interest has dropped significantly compared to the highest level in 2024. This interest is 23.3 billion dollars, down from the peak this month of 35 billion dollars.

The Ethereum Price Pattern Indicates More Potential Decline

The daily chart indicates that the value of Ethereum may be at risk of further decline. It formed a death cross on February 9th when the 50-day weighted moving average and the 200-day moving average intersected. This currency has also formed a pennant pattern, which occurs when two converging upward trends. It has also formed a flag pattern, consisting of a long vertical line and a triangle. In most cases, these models often lead to more downward trends, with the next level to watch being $2,166, the lowest level this month. A breakdown below that level will indicate more downward trends, possibly to $2,000.