Home » Ethereum Ethereum price ‘bear flag’ could sink ETH to $2K after 20% decline in three weeks Ethereum Reading 3 min Views 2 Analysts still expect Ethereum to hold its long-term bullish bias on bets that its highly-anticipated technical upgrade this year will be successful. Ethereum’s native token Ether (ETH) has dropped by nearly 20% in the last three weeks, hitting monthly lows near $2,900 on April 19. But despite rebounding above $3,000 since, technicals suggest more downside is possible in the near term, according to a classic bearish pattern. Ethereum price ‘bear flag’ setup activated Dubbed “bear flag,” the bearish continuation signal appears as the price consolidates higher inside an ascending parallel channel after a strong downward move (called the flagpole). It resolves after the price breaks out of the channel to drop further. ETH’s price turned lower after testing its bear flag’s upper trendline on April 4 and now eyes an extended decline towards its lower trendline near $2,700. If the pattern pans out as intended, the price could drop further, with its target at length equal to the flagpole’s height, as shown in the chart below. ETH/USD daily price chart featuring ‘bear flag’ setup. Source: TradingView As a result, Ether’s bear flag setup risks a potential retest of $2,000 in the second quarter. ETH price: macro factors Ethereum’s correlation with Bitcoin and the areas of traditional markets have also increased its downside risks in recent months. For instance, the correlation coefficient between Ether and Nasdaq 100 was 0.95 this April 19. A coefficient of 1 means that the two assets move in perfect tandem. ETH/USD and Nasdaq 100 correlation coefficient on daily chart. Source: TradingView Ether price is down by nearly 19% since the start of 2022. Meanwhile, Bitcoin, stock and other riskier markets have also fallen this year as investors assess the Federal Reserve’s willingness to aggressively raise rates and reduce its $9 trillion balance sheet. Longer-term bullish factors More or less, ETH’s fall comes primarily due to sentiments that there would be less cash available to purchase riskier assets. Nonetheless, speculators remain hopeful about a long-term uptrend due to its much-anticipated protocol upgrade called “the Merge,” likely to be released after June. “ETH is still experiencing selling pressure from the people that wanted to make a quick buck on the Merge,” noted DoopleCash, an independent market analyst, adding: At -2.8% supply growth a year post Merge, #ethereum will see about 3.3 million ETH a year burned. By the end of the decade total ETH supply will drop under 100 million. Or put another way, we will burn the equivalent of ALL ETH currently sitting on exchanges!!!! pic.twitter.com/zqr54TGCzC — Lark Davis (@TheCryptoLark) April 6, 2022 Kennan Mell, an analyst at Seeking Alpha, argues that Ethereum’s style of running shadow forks ahead of the Merge launch increases the update’s possibility to become successful upon launch. This should influence more investors, especially those that are waiting on the sidelines, to accumulate Ether in the long run. The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.