Ethereum Faces 25% Drop Risk as Key Support Breaks

Ethereum, the second-largest cryptocurrency by market capitalization, is facing significant downside risks as its native token, Ether (ETH), has broken below a key multi-year support level. This technical breakdown puts a target of $1,600 in play, representing a potential 25% drop from current levels. The two-week chart shows that Ether has slipped below the lower trendline of a symmetrical triangle that had held firm since mid-2022. The 50-period exponential moving average (EMA) around $2,545 acted as a resistance level, stalling the recovery after a temporary bounce near the 200-period EMA at $1,600 in March. The confluence of the 50-period EMA and the triangle’s lower trendline has proven to be a formidable resistance for ETH bulls, who have failed to overcome it in recent months, including June.

Other indicators of bearish pressure include Ethereum’s relative strength index (RSI), which remains below a multi-year descending trendline. Despite recent price rebounds, the RSI has failed to break above this trendline resistance, indicating waning bullish momentum and reinforcing the likelihood of continued downside. If this resistance confluence holds, ETH risks returning toward its 200-period EMA near $1,600, marking a potential 25% slide from current levels.

Ethereum’s onchain data further highlights the risk of ETH price declines in the coming weeks. Earlier in June, two Ethereum wallets, 0x14e4 and 0x26Bb, unstaked and withdrew 95,920 ETH (~$237 million). Of that, 62,289 ETH (~$154 million) has already been deposited to exchanges including HTX, Bybit, and OKX in the past 20 days. The remaining 33,631 ETH (~$83 million) still sits in the whale’s address, potentially ready to be sold. Data resource Lookonchain considers that the wallets are controlled by a single “massive whale” entity. This large ETH transfer to exchanges aligns with a recent report showing Ethereum inflows into Binance, the world’s largest crypto exchange by volume, have persisted for five consecutive days.

Glassnode data reveals further bearish undercurrents. The ETH supply held by addresses with 10,000–100,000 ETH has declined sharply since mid-May, while the 1,000–10,000 ETH cohort has seen a parallel rise. This indicates that large holders are either breaking up their wallets into smaller chunks or distributing ETH to new, possibly offloading, addresses, thus raising the cryptocurrency’s downside bias. The redistribution or offloading of ETH by large holders adds to the bearish pressure, as it suggests a lack of confidence in the short-term price appreciation of the cryptocurrency.

Ether’s bearish outlook contrasts with a broader upside sentiment across the market. Analyst Agela notes that Ether’s breakout above its weekly RSI resistance is only a “matter of time.” “This’ll be the catalyst for price appreciation,” he wrote, adding: “Since Q1 2024, ETH weekly RSI has made lower lows, and this is why ETH hasn’t been able to reclaim $4,000.” Other analysts further predict that the Ether price will rally toward $10,000 due to supportive technical indicators and persistent capital flows into ETH-focused investment funds. However, these predictions are based on the assumption that the current bearish pressure will subside, and the market will regain its bullish momentum. Until then, the downside risks for ETH remain significant, and investors should exercise caution when making investment decisions.