Ethereum Forms Bearish Pennant Targeting $1100

Ethereum's daily chart has revealed the formation of a bearish pennant, signaling a likely significant price decline ahead.

This troubling technical outlook, combined with a drop in on-chain activity, raises concerns about a continuation of the current downtrend. Analysts suggest that the price of Ethereum could plunge to around $1100.

The bearish pennant pattern typically arises following a sharp price drop, as the asset consolidates within an ascending triangle.

Confirmation of this pattern would occur if Ethereum's price dips below the support level of approximately $1950, particularly if accompanied by high trading volume. Such a move could lead to a price decrease mirroring the previous drop, potentially resulting in a 43% decline from current values.

Crypto analyst Crypto Patel indicated that maintaining prices above the $1800 mark is crucial to avoid this bearish scenario. He noted, "Hold $1,800 → Relief Bounce Toward $2,650; Lose $1,800 →…" in a recent post.

Decreasing Network Activity

Further pressure on Ethereum's price is attributed to a decline in network activity. On February 18, daily transaction volumes fell to 1.95 million, down about 33% from 2.89 million recorded on February 7.

This trend mirrors a similar decline seen in January 2024, when Ethereum's price dropped by 30%. Additionally, the Total Value Locked (TVL) in DeFi applications has also seen a downturn, decreasing by over 22% since February began, falling to $54.5 billion from $70 billion.

The reduction in TVL is accompanied by decreased trading activity on decentralized exchanges (DEXs), including Uniswap, the leading non-custodial exchange. Moreover, a four-week capital outflow from Ethereum-based ETFs has compounded the negative sentiment surrounding the asset.

Interestingly, Bitcoin has also formed a bearish pennant on its daily chart, with a potential target of $56,000 within February.