Ethereum price risks dropping to $2K on ‘bear flag’ setup

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Ethereum’s original token, ETH (ETH), will extend its 30% fall this year to its lowest price since July 2021 if a technical indicator is shown in writing.

Ethereum chart is drawing a bearish pattern
The price of ETH fell to a six-month low of $2,159 on January 24, 2022, before plummeting to $2,724 a day later. However, this led to the so-called bear flag chart pattern, which indicates that the price could fall to $2,000 or 17% below today’s level.

A bearish flag appears when the price consolidates higher after a strong bearish momentum, but eventually moves further after exiting the uptrend. At the same time, the price tends to fall by the length of the previous fall, which is called the “flagpole”.

The daily ETH/USD price chart looks like a bear flag. Source: Trading View
When it comes to Ether, the flagpole is over $850 tall. This shifts the price target of the bearish pennant by about $2,000. Earlier this year, another bear flag formation resulted in a similar drop as shown in the chart above.

The speed of the future is rising
Ethereum is more likely to hit $2,000 in the coming months due to Bitcoin (BTC) and its susceptibility to macroeconomic trends.

In particular, according to CryptoWatch data, the efficiency of the positive correlation between the Ethereum token and Bitcoin over the past 30 days was 0.92. In other words, in January 2022, Ethereum missed Bitcoin price trends with 92% accuracy.

Correlation between bitcoins and altcoins over the last 30 days. Source: CryptoWatch
The aforementioned bearish outlook is based on the dovish policy of the Federal Reserve. Most notably, the US Federal Reserve’s decision to withdraw its $120 billion a month Covid-19 stimulus program in early March and raise record rates from near zero after it began hurting so-called pandemic winners including tech stocks, gold . and bitcoin.

Paul Krugman, a Nobel Laureate in Economics and a cryptocurrency skeptic, foresaw a collapse in the price of bitcoin in 2022, noting that it was “an alarming echo of the mortgage crash” during the 2008 economic crisis.

“If you ask me, regulators made the same mistake they did with subprime loans: they failed to protect the public from financial products that no one understood, and many vulnerable families may end up paying the price,” he warned.

$2000 first for ETH?
With Ether looking bearish in the shadow of Bitcoin, many analysts expect the Ethereum token to resume its rally later in 2022 due to its involvement in the new decentralized finance and non-perishable currency sectors.

For example, billionaire investor Mark Cuban noted last year that Ethereum could outperform Bitcoin in terms of growth.

Mike McGlone, chief strategy officer at Bloomberg Intelligence, has predicted that the value of Ether will hit $5,000 by 2022 despite the Fed’s prudent policy. The veteran analyst called the central bank’s plans to raise interest rates a “win-win scenario” for bitcoin and ether against high inflation in the United States four decades ago.

Related: Ethereum hashrate gains new ATH points as POS migration continues

However, McGlone expected Ether to hit $2,000 before continuing its upward move. he is not:

“The ultimate force to stop central bank restrictions is a stock market crash with implications for cryptocurrencies […] The price supporting an exit from 2021 is around $30,000 for Bitcoin and $2,000 for Ethereum.”

Source: CoinTelegraph

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