Ethereum’s inverse head-and-shoulders pattern signals a bullish outlook amid ETF outflows and macroeconomic pressures.
Ethereum Faces Persistent Challenges
Ethereum has dropped nearly 20% from its December high of $4,000, with broader cryptocurrency market sell-offs adding to the downward pressure. The decline coincides with significant outflows from Ethereum spot exchange-traded funds (ETFs), which saw net withdrawals of $159 million on January 9 and $86 million the previous day. Despite these outflows, Ethereum ETFs have accumulated $2.5 billion in net inflows since their 2024 approval.
Exchange Balances Reflect Investor Sentiment
CoinGlass data reveals that Ethereum exchange balances rose to 15.85 million ETH on January 9, up from 15.3 million on December 30. This increase suggests heightened liquidation activity among investors, often viewed as a bearish signal for the cryptocurrency market.
Macroeconomic Factors Add to Pressure
Ethereum’s struggles are also linked to macroeconomic factors, particularly rising U.S. bond yields. The 30-year bond yield reached 4.96%, its highest level since October 2023, signaling expectations of continued hawkish policies by the Federal Reserve in response to persistent inflation concerns.
Chart Analysis: A Bullish Pattern Emerges
Despite the downturn, Ethereum remains above its 50-week and 100-week moving averages, which supports a cautiously optimistic outlook. The weekly chart shows the formation of an inverse head-and-shoulders pattern, a classic bullish reversal indicator.
- Head: $2,155
- Left Shoulder: $2,825
- Right Shoulder: Forming above $2,825
A breakout above the neckline at $4,085 could propel Ethereum toward its all-time high of $4,865 and potentially the $5,000 milestone. However, a drop below $2,825 would invalidate the bullish scenario.
Investor Outlook
While the inverse head-and-shoulders pattern suggests potential upward momentum, macroeconomic headwinds and market volatility remain critical factors to monitor. The cryptocurrency market will closely watch Ethereum’s ability to stay above the key support levels and break through resistance.
Disclaimer:
The information provided on 13Desk is for informational purposes only and should not be considered financial advice. We strongly recommend conducting your own research and consulting with a qualified financial advisor before making any investment decisions. Investing in cryptocurrencies carries risks, and you should only invest what you can afford to lose. 13Desk is not responsible for any financial losses incurred from your investment activities.
