Ethereum on-chain data and a bear pennant on the day by 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 day by day chart, a technical chart formation that comes with strong bearish momentum. This weakening technical setup and declining network activity might 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 day by day chart. Source: Cointelegraph/TradingView
The pennant shall be resolved once the worth 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 also be reflected in its on-chain activity: Ethereum's day by 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 analogous sharp drop in Ethereum's day by 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 also 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 day by 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 worth downward trend.
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