Ethereum Price Prediction: Bullish Breakout Likely with Key Pattern Forming
Ethereum's price dip may set the stage for a major recovery as key levels hold.
By Tylt Editorial Team
Ethereum's price has dropped 20% from its December high of $4,000.
Inverse head and shoulders pattern signals potential bullish reversal.
Critical levels to watch include $2,825 and the neckline at $4,085.
Ethereum, the second-largest cryptocurrency by market capitalization, has faced considerable volatility in recent months. Its price has plunged nearly 20% from December highs of $4,000, mirroring a broader sell-off in Bitcoin and other altcoins. This downturn has been partly fueled by significant outflows from Ethereum spot exchange-traded funds (ETFs). Over the past two days, Ethereum ETFs experienced a net outflow of $245 million. Despite these recent outflows, Ethereum ETFs have attracted a cumulative net inflow of $2.5 billion since their regulatory approval in 2024.
The rise in ETH held on exchanges further underscores bearish sentiment. CoinGlass data reveals that Ethereum's exchange balance climbed to 15.85 million on January 9, up from 15.3 million on December 30, as more investors moved assets to exchanges, often a precursor to liquidation.
Macroeconomic factors have also weighed on Ethereum. Surging U.S. bond yields, driven by a hawkish Federal Reserve, have made risk assets like cryptocurrencies less attractive. The 30-year bond yield reached 4.96%, its highest level since October 2023, while short- and medium-term yields also rose, signaling market expectations of prolonged monetary tightening.
Despite these challenges, Ethereum remains above its 50-week and 100-week moving averages, suggesting that bullish momentum is not entirely lost. Most significantly, Ethereum’s price chart is forming an inverse head and shoulders pattern, a classic bullish reversal indicator. The "head" is at $2,155, while the "left shoulder" formed at $2,825. As long as Ethereum stays above the $2,825 support level, the bullish outlook holds.
A breakout above the neckline at $4,085 could trigger a sharp rally, potentially pushing Ethereum toward its all-time high of $4,865 or even the $5,000 psychological milestone. However, a drop below the $2,825 right shoulder would invalidate the bullish scenario, possibly extending the downtrend.
Investors are closely monitoring these key levels as Ethereum approaches a critical juncture. With the possibility of a significant upward move hinging on technical and macroeconomic factors, market participants remain cautiously optimistic about the cryptocurrency’s trajectory.
