The flop? Ethereum Price Weakens After Merger, Risking 55% Drop Against Bitcoin

A classic bearish reversal pattern suggests difficulties ahead for the ETH/BTC pair despite Ethereum's historic Merge event.< /p> Market analysis

Ethereum's native Ether (ETH) token has been forming an inverted cup and handle pattern since May 2021 on the weekly chart, hinting at a potential downside against Bitcoin (BTC).

ETH / Weekly BTC price chart with reverse cup and handle split pattern. Source: TradingView

An inverted cut and handle is a bearish reversal pattern, accompanied by lower trading volume. It usually resolves after the price breaks below its support level, followed by a drop to the level at a length equal to the maximum height between the peak of the cut and the support line.

Applying the theoretical definition to the weekly chart of ETH/BTC shows 0.03 BTC as the next downside target, down about 55% from the September 16 price.

Can ETH/BTC pull a Dow Jones?

Alternatively, the ETH/BTC pair could nevertheless generate significant gains in the coming years.

On the weekly log chart, the ETH/BTC pair has been depicting a potential dip and handle since January 2018. In other words, a rally towards 0.5 BTC in 2023 is on the table, up further by 520% ​​compared to the current one. price levels.

Unlike its inverse counterpart mentioned above, the cups and handles are bullish reversal patterns with their upside targets located at levels equal to their maximum height when measured from their point of origin. break.

Senior analyst Tom Bulkowski notes that these models have a 61% success rate in hitting their upside targets.

For example, the cup and handle pattern that formed on the Dow Jones chart during the Great Depression of the 1930s and 1940s - where th...