Key Insights:
Ethereum/Bitcoin charts have shown the possibility of a major fall in Ethereum.
The charts show that if ETH/BTC falls below 0.04, it could crash ETH's price to $1150 levels.
The last time this scenario emerged was in 2019 when ETH fell 70%.
However, if Ethereum ETFs get high inflows, they could prevent ETH from crashing.
Crypto Analyst Benjamin Cowen shared an insight on X that Ethereum might witness a massive crash in the near future. According to estimates, if the ETH/BTC chart pattern continues on its current downtrend, it might cross below a critical support line. The break of this support could sink Ethereum's price to the $1150 level.
This chart pattern which had last emerged in 2019, causing a 70% fall in Ethereum. That year, the fall in ETH/BTC charts was followed by the fall in ETH/USD charts.
As per Cowen, a similar chart pattern also emerged on ETH/BTC charts in 2024. This time, Ethereum faced a massive crash due to a widespread market sell-off. However, Ethereum's situation worsened because the Grayscale Ethereum ETF sold approximately $2.2 billion worth of ETH within 14 days (23 July to 05 August).
Cowen predicted this decline for the first time in May 2024 and then reiterated his predictions in the current month.
A closer look at the ETH/BTC charts also reveals that this fall in 2024 seems even more intense on a monthly chart.
ETH/BTC Monthly Charts on 07 Aug 2024
ETH/BTC Monthly Charts on 07 Aug 2024
Further, in addition to the downtrend, on-chart indicators have been signalling a bad future for Ethereum since June 2024. At press time, the RSI on the ETH/BTC monthly chart was 36 and falling. Another indicator, MACD, also showed a divergence, which increases the risk of a decline in the near future.
A closer look at Cowen's yesterday's tweet reveals that the US Fed's interest rates played a crucial role in sucking away the liquidity from the crypto markets which caused the markets to tumble.
The US Fed began raising interest rates in March 2022. Usually, interest rates take a year to show their impact, and as expected, by March 2023, ETH/BTC charts had entered a downtrend.
The Fed's interest rates impacted Ethereum more than Bitcoin because the latter had its ETF much before Ethereum did, which granted it more liquidity. Ethereum could only see its ETF launch just 15 days earlier, on 23 July 2024.
Benjamin Cowen's predictions are based on hard data, but this is not the only scenario that could occur in the future.
Ethereum may not fall so easily to $1150. This is because the Ethereum ETFs have picked up pace lately. The net ETF inflow for much of this month has been positive, which might support Ethereum in breaking out of its downtrend very soon.
Further, the negative impact of just one ETF (Grayscale) could easily be set-off by the net inflows in all others. This had happened on 5 and 6 August when ETFs saw $48.8 and $96.4 million in net inflows.
At press time, Ethereum was trading at $2391, down 5% in the last 24 hours.
For Ethereum to continue its bull trend, it needs to cross $2500 and then $3000 within the next week.
In case, it fails to cross the above levels, the price may soon crash to the lows of 5 August when Ethereum touched $2122. This is below the support zone of $2250.
Benjamin Cowen predicts that if Ethereum falls below $2250, i.e., the ratio ETH/BTC gets below 0.04, the price may crash further to $1150, which is 70% below Ethereum's price on 08 May 2024.
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