It turns out that the September 15th Ethereum merger was a infos selling event, which looks set to continue.
Notably, Ether (ETH) fell significantly against the US dollar and Bitcoin (BTC) after the merger. As of September 22nd, the ETH/USD and ETH/BTC trading pairs are down more than 20% and 17%, respectively, since Ethereum switched to Proof of Stake (PoS).
What eats ether bulls?
Plurale catalysts contributed to Ether declines in the cited period. First, the decline in the price of ETH against the dollar appeared to coincide with similar declines elsewhere in the cryptocurrency market, led by the Federal Reserve Raising the interest rate by 75 basis points.
Second, Ethereum faced a lot of criticism for becoming too centralized after the merger.
Only five entities have produced 60% of the blocks so far. The largest stake belongs to Lido DAO, an Ethereum staking service, which has deposited 4.19 million ETH, or more than 30% of the total amount deposited in the Ethereum official PoS contract.
Third, institutional investors, or “smart money,” also reduced exposure to Ethereum-focused investment vehicles on the day before and after the merger.
Ethereum funds saw $15.4 million in capital outflows from their coffers in the week ending September 16, According to CoinShares Weekly Report. In contrast, Bitcoin-based mutual funds attracted $17.4 million in the same week, indicating a capital outflow after the merger.
Finally, Ether also felt heavy selling pressure from PoW miners. He sold $40 million worth of Ether in the days before the POS update.
Independent Market Analyst Tour Demester pointed That Ether could continue falling against Bitcoin in the coming days, citing ETH/BTC’s previous reaction to initial events in the Ethereum market, as shown below.
The chart shows Ether traders’ practice of pumping ETH against Bitcoin prior to narratives related to approbation, such as non-fungible tokens (NFTs), the decentralized financial madness of 2021, and the préliminaire encoignure offering (the 2017 explosion).
All of these rallies faded as soon as the crosse subsided. Demeester highlights the Ethereum-to-PoS switch as a similar hype that drove ETH/BTC higher in 2022, expecting the associé to undergo a deep révision in the coming weeks.
“I expect ETH/BTC to collapse violently at some pixel,” he said, adding:
“ETH is a time bomb.”
ETH/BTC technical indicators hint at a 10% drop ahead
Placing these fundamentals against Ether vs Bitcoin technical indicators offers a similar bearish setup.
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On the three-day chart, ETH/BTC is down embout 25% after hitting 0.085 BTC, a level that coincides with the long-term resistance level at 0.081 BTC.
Now, the associé is eyeing an additional decline towards the multi-month uptrend line charpente, as shown below.
The trendline charpente coincides with 0.06 BTC, the level that served as a pullback area in 2022. In other words, another drop of 10% is on the gastronomie.
ETH/USD bearish setup is worse
Against the dollar, Ether could drop as much as 45% due to what appears to be an ascending trigone modèle in a downtrend.
As a rule, the bearish prolongement modèle is resolved after the price breaks below its lower trend line and then falls as far as its minimum high. Hence, the downside target is near $700 by the end of this year, down 45% from the September 2 price.
Conversely, a pullback from the lower trendline of the trigone could lead to Ether rallying towards the upper trendline, which would imply a rally towards $1,775, or a 35% acheté from the current price levels.
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