In a higher interest rate environment, Ethereum’s native cryptocurrency, Ether (ETH), continues to suffer downside risks. However, one analyst believes that the token’s next selloff could turn into a bear trap as the market anticipates the Merge’s release in August.
According to a technical setup released on May 20 by Wolf, an independent market expert, Ether’s price might reach $4,000 before the end of 2022.
The analyst predicted that ETH would move within a multi-month ascending triangle pattern with a horizontal trendline resistance and rising trendline support.
Notably, ETH’s recent retest of the structure’s lower trendline may signal the start of a large comeback toward the structure’s higher trendline, which is currently around $4,000.
Wolf got his bullish inspiration from a similar triangle formation from 2016, which preceded a massive bull run from $1 to $27. Another ascending triangle formed in 2017 was followed by a bullish follow-up, with ETH/USD rising 270 percent to over $1,500.
Reasons behind the bearish outlook
Preston Van Loon, one of the Ethereum core developers, stated that the blockchain project’s much-anticipated upgrade to a proof-of-stake consensus mechanism would take place sometime in August.
Wolf speculated that Ethereum was preparing a “bear trap,” which would make sense prior to the update and would complement his technological setup, as explained above.
The impending update was one of the main drivers of Ether’s price rise in 2021, as many investors expected it to solve the Ethereum blockchain’s long-standing scalability problem while lowering transaction and gas costs. Despite this, the Ethereum Foundation continued to postpone the launch.
Unquestionably, this lack of progress has played a big influence in Ethereum’s recent price slide, Bitfreedom Research, a tech-stock and crypto research firm, said in a report forecasting ETH’s price to fall to $950–$1,900 by October 2022.
Higher interest rates were mentioned as the primary cause for the firm’s pessimistic perspective on Ethereum, noting:
Because the crypto market is so volatile, crypto startups require a large amount of cash to fuel quick growth. With no currency available, Ethereum’s ERC20-token economy may enter a downward spiral, it said.
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Source: https://coinpedia.org/ethereum/ethereum-eth-price-to-fall-950-1900-by-october-2022-heres-why/