Key Points
- Ethereum’s price action is mimicking its 2019 pattern, potentially indicating an upswing.
- Whales continue to accumulate Ethereum, with negative netflows on derivative exchanges suggesting reduced selling pressure.
Ethereum [ETH] is the second-largest cryptocurrency, with market sentiment transitioning from bearish to bullish as we approach the end of 2024.
The price action of Ethereum is showing a pattern similar to 2019 on the ETH/USD pair, characterized by an ascending wedge.
Price Pattern Analysis
The higher lows of the current cycle’s wedge are tenfold larger than those seen in 2019. In 2019, Ethereum’s price fell below its ascending wedge prior to the first Federal Reserve rate cut, a situation parallel to the current scenario in 2024.
After the 2019 rate cut, both ETH/USD and ETH/BTC hit bottom, forming a strong confluence. The expectation is that the current pattern will repeat this success, with the price likely to drop below the wedge, capture liquidity before reversing to the upside in late Q4 2024 or early Q1 2025.
However, if the price remains below the ascending wedge for a prolonged period, further analysis might be necessary to adjust strategies or mitigate potential losses.
Whale Accumulation and Exchange Netflows
Whales, or Ethereum’s largest holders, are playing a significant role in supporting this expected upward movement. They have been steadily accumulating more ETH since 2019, a trend that intensified after the Shanghai upgrade in early 2023.
Currently, whales control over 43% of Ethereum’s circulating supply, closing in on the 48% held by retail investors. This accumulation suggests that these major players anticipate Ethereum’s price to rise over time.
Ethereum’s exchange netflows data showed that the negative netflow on derivative exchanges has exceeded 40,000 ETH. This indicates more ETH is being withdrawn from these exchanges and transferred to cold wallets, suggesting a decrease in selling pressure.
Traders may be preparing for long-term gains, indicating that the current decline in Ethereum’s price might be a temporary correction, potentially setting the stage for a significant upward movement.
Ethereum ETF Update
While some negative net-flows in Ethereum ETFs have been observed, there are positive signs. ETH ETFs, including Fidelity’s, have seen inflows over the past 24 hours. Grayscale’s ETHE experienced the largest and the only outflow.
The overall positive sentiment surrounding ETFs could potentially support Ethereum’s future price growth.
