Ethereum Risks “Bull Trap” After 25% ETH Price Rebound


Ethereum’s Ether (ETH) token may be entering a “bull trap” zone after bouncing above the $1,000 mark from an 18-month low of $885.

Ether price paints an “ascending wedge”

The first of these indicators is an “ascending wedge”, a classic bearish reversal pattern that forms after price trends upwards within a range defined by two ascending but converging trend lines. The coin pattern gains confirmation if the trading volume drops along with the rising price.

Theoretically, a rising wedge resolves after price crosses below its lower trendline and contemplates a descent to the level of length equal to the maximum height between the upper and lower trendline of the wedge.

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Ether has been forming an ascending wedge since mid-June, as shown in the chart below.

Four-hour ETH/USD price chart with a “rising wedge” pattern. Source: Trading View

Therefore, its intermediate bias appears on the downside, with a decisive breakdown below the lower trendline risking a decline towards $870-$950, depending on when the breakdown begins.

This means a 15-25% drop from the current ETH price.

$70 million leaves Ethereum funds

Ethereum’s bearish case is supported by evidence of large outflows of investment funds.

Notably, Ether-related investment products saw outflows worth $70 million in the week ending June 17, according to data retrieved by CoinShares.

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It was notably the eleventh consecutive week of outflows, bringing the total outflows since the beginning of the year to $458.6 million.

Asset flow. Source: CoinShares

In contrast, 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.

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CoinShares cited investor concerns over Ethereum’s “merger” with proof-of-stake as the main reason for its funds’ poor performance this year.

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Ethereum options strike price: $1,000

ETH options open interest on Deribit shows over $1 billion in notional Ether, pending expiration on June 24.

Ether options open interest by strike price. Source: Coinglass

The June 24 expiry could potentially influence the price action of Ether, mainly because it is only trading 10% above the preferred strike price of $1,000. Additionally, a move towards $1,000 could trigger the ascending wedge setup.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Every investment and trading move involves risk, you should conduct your own research when making a decision.