Ethereum Price Could See 15% Upside with Formation of Inverse H&S Pattern

Ethereum's price is showing potential for a significant rise, as a bullish reversal pattern is emerging amidst a resurgence in spot Ethereum ETF inflows following a brief decline.

Key Takeaways

Ethereum is currently trading at $3,113, which marks an 8% drop since last Thursday and a 37.1% decrease from its all-time high in August.
A reduction in the supply of Ethereum on centralized exchanges has reached a record low of 8.7%, indicating a reduction in sell-side pressure.
U.S. spot Ethereum ETFs have seen a return of nearly $209 million in inflows, suggesting increasing institutional interest.
The weekly chart displays a substantial inverse head and shoulders pattern, often signaling a bullish reversal.
The immediate price target for Ethereum is around $3,600, representing a potential 15.65% upside.

Ethereum price eyes 15% upside as a giant inverse H&S pattern takes shape.

Ethereum's Current Market Status

At the latest check on the morning of December 15, Ethereum (ETH) was priced at $3,113. This reflects an 8% decrease since the previous Thursday and represents a 37.1% drop from its all-time high recorded in August. The decline in price has been primarily influenced by decreased network activity, profit-taking by investors, and caution among investors due to broader macroeconomic concerns and significant liquidations affecting the crypto market.

ETH price has formed a multi-year bullish reversal pattern on the weekly chart.

Signs of Potential Recovery

Despite the recent downtrend, there are emerging indicators that suggest Ethereum may be entering a phase of consolidation, potentially paving the way for substantial upside in the coming weeks:

The amount of Ethereum held on centralized exchanges has plummeted to an all-time low of 8.7% since the network's inception in mid-2015. This decline is attributed to an increase in ETH being staked, restaked, and added to digital asset treasuries (DATs) focused on accumulation. Notably, Bitmine, led by Tom Lee, purchased an additional $73.2 million worth of Ethereum just yesterday.
The decline in exchange balances typically reduces the selling pressure, which, partnered with high demand, can lead to an increase in the asset's price.

Additionally, U.S. spot Ethereum ETFs experienced a return of inflows, raking in nearly $209 million after a week of outflows. Generally, when institutional demand increases, investor sentiment tends to shift towards a bullish outlook on the asset.

Technical Analysis

From a technical standpoint, Ethereum is presenting a significant inverse head and shoulders pattern on the weekly chart, suggesting a potential bullish reversal. The price has also surpassed the 50-day moving average, a critical indicator that historically has led to robust rallies.

Furthermore, the relative strength index (RSI) for Ethereum is consistently trending upwards, indicating a resurgence in buying pressure for the token.

Price Targets

Currently, the immediate price target for Ethereum rests around $3,600, reflecting a likely increase of 15.65% from its existing price. This target coincides with the 61.8% Fibonacci retracement level, establishing it as a crucial resistance zone for traders to monitor.

On the other hand, if selling pressure resurfaces, the price may find support at around $2,760, aligning with the 38.2% Fibonacci retracement level, which should also be closely observed.