Ethereum is slowly developing a unique pattern. Is there a sudden surge on the way?

Ethereum’s value has fallen sharply in the past year, after it encountered significant resistance near $4,000 levels.

EthereumETHIt has dropped by more than 20% since December’s high. This coincides with the ongoing selling of Bitcoin and other alternative currencies.

Part of the decline can be attributed to withdrawals from Ethereum Spot Exchange-Traded Funds. The net withdrawals from these exchange-traded funds on Wednesday were $159m, following an outflow of $86m the previous day. Ethereum ETFs are still attracting net flows of $2.5 billion, which is despite the recent outflows.

The decline of ETH has coincided also with an increase in the exchange balances. CoinGlass reported that on January 9, the total number of ETH traded on exchanges had risen to 15,85 millions, up from 15,3 million as at December 30, according to CoinGlass. A rise in exchange values is often an indication that investors are selling their assets.

In a macroeconomic context, ETH was impacted by the surge in U.S. Bond yields due to a hawkish Federal Reserve stance. The 30-year-bond yield rose to 4,96%, the highest it has been since October 20, 2023. The short-term and medium-term bonds yields continue to increase.

The market is expecting the Fed to continue its aggressive stance due to the persistent concerns about inflation.

Ethereum Price Analysis

On the weekly chart, ETH is struggling to break through $4,000 which has been its resistance level since March last year.

The cryptocurrency is still above its 50-week average and the 100-week one, which indicates that the bulls are still in control.

Ethereum, in particular, is forming a widely-recognized bullish pattern called an inverse Head and Shoulders. The “head” The cheapest of the three is $2,155. “left shoulder” formed at $2,825. The bullish view remains unchanged as long as ETH is above $2,825.

If ETH crosses the $4,085 neckline then it would be a confirmed breakout. The psychological $5,000 and all-time record high, $4,865, are next to be watched. The bullish forecast would be invalidated if the price dropped below the right-shoulder level of $2,825.