Ethereum on-chain data and a bear pennant on the each day chart suggest that bears could goal the $1,100 level. Would a drop into this range represent a generational buying opportunity?
Ether (ETH) price printed a bear pennant on the each day chart, a technical chart formation that comes with strong bearish momentum. This weakening technical setup and declining network activity may very well be a signal for ETH's downward trend to proceed, potentially driving the altcoin's price to $1,100.
A bear pennant pattern is a bearish pattern that forms after price consolidates inside an ascending triangle following a pointy price decline.
ETH/USD each day chart. Source: Cointelegraph/TradingView
The pennant will probably be resolved once the value falls below the pennant's lower trendline at $1,950. In this case, the ETH/USD pair could fall across the peak of the previous downtrend. This puts the measured goal for ETH price at $1,100, a 43% decline from the present price.
Crypto analyst Crypto Patel said that ETH price needs to carry the $1,800 support to invalidate the pennant.
ETH/USD two-day chart. Source: Crypto Patel
Ethereum’s declining network activity signals bearish pressure
Ether's price weakness can be reflected in its on-chain activity: Ethereum's each day transaction count fell to 1.95 million on Wednesday, down 33% from 2.9 million on February 5.
Daily Ethereum transaction count. Source: CryptoQuant
An identical sharp drop in Ethereum's each day transaction count was seen in January 2024, which coincided with a 30% drop within the altcoin's price.
The drop in Ethereum network activity can be evident when analyzing the Total Value Lock (TVL) of the network’s smart contracts.
Ethereum's TVL fell to $54.5 billion on Wednesday from $70 billion at first of the month, a decline of over 22% in only over two weeks.
Ethereum TVL and DEX volumes. Source: DefiLlama
Negative signs include a 26% drop in deposits on decentralized exchange Uniswap (DEX) and a 35% drop on Ether.fi and EigenLayer.
The each day trading volume of Ethereum-based DEXs also fell from $3.72 billion to $1.5 billion over the identical period.
Additionally, global Ethereum investment products recorded a complete of $85.1 million in net outflows between February 9 and February 13, further amplifying the value downward trend.
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