Here’s Why Ethereum Price Looks Bearish Below $2K.

Ethereum onchain data and a bear pennant on the daily chart suggest that bears may target the $1,100 level. Would a dip to that zone represent a generational buy opportunity?

Ether (ETH) price printed a bear pennant on the daily chart, a technical chart formation associated with strong downward momentum. This weakening technical setup and declining network activity may signal the continuation of ETH’s bear trend and possibly send the altcoin’s price to $1,100.

A bear pennant pattern is a bearish setup that forms after the price consolidates inside an up-sloping triangle following a sharp price drop.

ETH/USD daily chart. Source: Cointelegraph/TradingView

The pennant will resolve once the price breaks below the lower trend line of the pennant at $1,950. If this happens, the ETH/USD pair could drop by as much as the previous downtrend’s height. This places the measured target for ETH price at $1,100, down 43% from the current price.

Related: Ether bulls target $2.5K as staking ETF launch, RWA growth fuel optimism

Crypto analyst Crypto Patel said that ETH price needs to hold the $1,800 support to invalidate the pennant.

ETH/USD two-day chart. Source: Crypto Patel

Ethereum’s declining network activity signals downward pressure

Ether’s price weakness is also reflected in its onchain activity, with Ethereum’s daily transaction count dropping to 1.95 million on Wednesday, down 33% from 2.9 million on Feb. 5.

Ethereum daily transaction count. Source: CryptoQuant

A similar sharp drop in Ethereum’s daily transaction count was seen in January 2024, accompanying a 30% drop in the altcoin’s price.

The decline in Ethereum’s network activity is also evident when analyzing the total value locked (TVL) on the network’s smart contracts. 

Ethereum’s TVL has dropped to $54.5 billion on Wednesday from $70 billion at the beginning of the month, a decrease of over 22% in just over two weeks.

Ethereum TVL and DEX volume. Source: DefiLlama

Negative signs include a 26% decrease in deposits on the Uniswap decentralized exchange (DEX) and a 35% drop on Ether.fi and EigenLayer.

The daily trading volume on Ethereum-based DEXs also plummeted to $1.5 billion, from $3.72 billion, over the same period.

In addition, global Ethereum investment products saw a total of $85.1 million in net outflows between Feb. 9 and Feb. 13, adding to the price downtrend.

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