The Ethereum price is at risk of a significant decline, potentially falling by 6% as it nears the neckline support of a developing head and shoulders pattern. Current data from Coinglass indicates a rise in ETH futures open interest from $35.2 billion to $38.4 billion, suggesting increased trader activity in anticipation of market movements.
As of December 23rd, the price of Ethereum experienced a minor decrease of 1.65%, settling at $2,964. This bearish trend is reflective of a broader corrective phase in the cryptocurrency market, especially as Bitcoin seems poised for a reversal around the $90,000 mark. Despite the prevailing selling pressure, institutional entities continue to accumulate ETH, with on-chain metrics showing that altcoins are outperforming BTC.
Since last weekend, Ethereum has displayed low volatility, trading consistently below the $3,000 threshold. The daily price chart reveals a series of short-bodied candles with diminished trading volume, indicating a lack of decisive action from buyers and sellers. Within this consolidation phase, the price attempted to break through overhead resistance, spurred by bullish sentiment in futures markets.
According to Coinglass, the open interest associated with Ethereum futures has surged by 9% as traders look to position themselves for an upcoming price shift. Institutional interest in Ethereum is also reportedly on the rise, especially as we approach 2025. Notably, Fasanara Capital recently executed a leveraged buy of 6,569 ETH, approximately valued at $19.72 million, and utilized these tokens as collateral on the Morpho DeFi lending protocol to secure further ETH.
Additionally, BitMine Immersion Technologies, under the leadership of Fundstrat”s Tom Lee, has acquired 29,462 ETH, valued around $88.1 million, as part of its ongoing accumulation strategy. These tokens were transferred from BitGo and Kraken, bolstering BitMine”s holdings to over 4 million ETH, as it aims to reach 5% of the total supply.
The combination of institutional purchases and support from the futures market may provide a foundation for a potential rebound in Ethereum prices. However, a closer examination of the 4-hour chart reveals a classic bearish reversal pattern, known as head and shoulders, which is characterized by three peaks: a left shoulder, a head, and a right shoulder. This pattern typically precedes a breakdown below the neckline support.
The current trading patterns suggest that the Ethereum price is nearing its neckline support at $2,800, where a breakdown could lead to a further decline of approximately 6%, targeting immediate support levels of $2,600 and potentially extending to $2,400. Conversely, should the neckline support hold firm, renewed buying pressure from institutional and futures traders could facilitate a recovery towards the $3,000 level.
