Recent Ethereum price action saw ETH reaching another low of $2,150 on September 6, raising concerns of a more severe drop towards the $2,000 price level. Although these concerns were eased with a subsequent bounce to $2,460 on September 13, Ethereum remains largely in a downtrend, with a triple-bottom price formation now shaping up.

Interestingly, this triple bottom formation is not new for Ethereum. As technical analysis points out, the current price action seems to repeat a similar playout in mid-2021.  

Ethereum Fractal Suggests Rally In Q4

According to a technical analysis by crypto analyst CryptoBullet on social media platform X, Ethereum is shaping up to form a triple bottom price formation on the 1D candlestick time frame. While the third bottom has yet to be fully completed, the analyst draws attention to a similar pattern that unfolded between June and August 2021.

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During those three months, Ethereum’s price fluctuated up and down to create three distinct lows just above the $1,675 mark. After the third low was established, Ethereum experienced a significant bullish rally that propelled it to break through and establish its current all-time high. This upward movement became even more pronounced after a fractal pattern emerged in August 2021, signaling a strong momentum shift.

Recent market dynamics have prompted Ethereum to create two bottoms of around $2,150 in August and September. Interestingly, a recent rejection at the $2,450 resistance has seen Ethereum pushing on a decline. This has prompted analyst CryptoBullet to highlight the possibility of a third low in October, thereby completing the triple bottom formation.

Price formations in cryptocurrency markets are known to repeat over time, often following patterns that can help traders anticipate future movements. While no two market conditions are exactly the same, studying past price movements provides valuable insights into what may happen in the future. A similar playout of the 2021 price action puts on a similar surge for Ethereum in Q4 2024. Notably, the analyst envisioned a rally towards the $3,700 price level. 

What’s Next For ETH?

At the time of writing, Ethereum is trading at $2,320 and continues to exhibit a weak short-term outlook. If Ethereum fails to clear the $2,340 resistance, it could start another decline towards $2,150. 

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This weak performance and outlook are even more pronounced compared with Bitcoin. As such, Ethereum/Bitcoin is now at its lowest level since April 2021, a staggering 41-month low. Most of this lackluster action has also been exacerbated by selloffs from a few large holders. For instance, Ethereum co-founder Vitalik Buterin recently came under scrutiny for selling $2.2 million worth of Ethereum. 

Featured image created with Dall.E, chart from Tradingview.com

Recent market dynamics have again brought Ethereum’s supply into the spotlight and reiterated concerns about its inflationary trend. Earlier this year, Ethereum reached a significant milestone in its circulating supply, surpassing 120 million ETH and the number continues to grow.

Unlike other prominent cryptocurrencies such as Bitcoin and Cardano, which have fixed supply caps, Ethereum was designed with an unlimited supply of tokens. This fundamental difference makes Ethereum an inherently inflationary asset, one that has a continuously increasing supply.

On-chain data from Ultrasound.money has shed light on the growing supply of ETH in recent months amidst notable price fluctuations for the cryptocurrency. The most recent data indicates that the total supply of Ethereum has now reached approximately 120.28 million ETH.

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Over the past seven days alone, 16,039 new ETH tokens have been issued. This pace of issuance corresponds to an annual inflation rate of 0.70%. Interestingly, this data shows that 243,886 ETH has been created in the past four months since the Dencan upgrade in March.

What Does This Mean For Ethereum?

Ethereum’s inflationary mechanism is mostly counteracted by burning tokens. This burn mechanism was introduced as part of Ethereum’s London Hard Fork in order to introduce a deflationary mechanism to Ethereum.  This mechanism aims to reduce the overall supply of ETH by burning a portion of the transaction fees, thereby introducing a deflationary counterbalance. 

However, data from Ultrasound.money shows the burns are currently lagging behind issuance, and Ethereum is now on an inflationary trajectory. Particularly, 2,028 ETH were burned in the past seven days, compared to 18,075 ETH issued in the same timeframe. Such a sustained uptrend in supply growth could cause downward pressure on the price of ETH in the case of a decline in demand.

At the time of writing, Ethereum is trading at $2,615 with no significant gains or losses in a 24-hour timeframe. Looking at a broader seven-day price action shows Ethereum has largely traded within a range of $2,750 on the upper end and $2,530 on the lower end. The latest price action saw Ethereum rebounding at $2,540 in the past 12 hours. If this continues, Ethereum could possibly push up and retest $2,750 in the next few hours.

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According to the latest figures from Greeks.live, approximately 184,000 ETH options are set to expire today. These options represent a substantial nominal value of $470 million and are characterized by a put-call ratio of 0.8 and a maximum pain point of $2,650. This high put-call ratio value means market participants are currently buying more put options than call options, which in turn suggests a bearish sentiment. 

Pictured image from Dall-E, chart from Tradingview.com

Ethereum (ETH) could be setting the stage for a massive comeback after the recent developments surrounding the Bank of Japan (BOJ)’s interest rate decision. Additionally, the sentiment around ETH seems to be shifting toward a positive note after the recent market crash.

Bank of Japan Backpedels Interest Rate Hike Talks

Bank of Japan’s deputy governor, Shinichi Uchida, clarified in the early Asian session on Wednesday that the central bank will not raise interest rates amid uncertain market conditions. This remark contradicts last week’s hawkish comments by Central Bank Governor Kazuo Ueda.

These comments from Uchida caused the Nikkei Index to surge by 5% on Wednesday, and the positive effects could also be seen across the crypto and stock markets. Ethereum is in the perfect position to trigger a massive comeback.

Three Reasons for Ethereum Price Comeback

BOJ’s decision is the main bullish driver that has uplifted the stock markets worldwide. In addition to these, Ethereum has three key reasons why it could witness a massive recovery rally. 

1. According to James Butterfill, CoinShares’ Head of Research, investors flocked to ETH in the first two days after the crash while avoiding BTC.
2. Spot Ethereum ETFs saw a net flow of $98.3006 million despite the recent market crash, illustrating the above point. 
3. Nasdaq and BlackRock have filed with the US Securities and Exchange Commission (SEC) to list and trade options for spot Ethereum ETF. 

These three developments are fundamental and are likely to have a huge impact on the price of Ethereum, especially if the macroeconomic conditions settle down. 

Ethereum price prediction shows that the $2,618 is the next key resistance level to watch. Overcoming this hurdle could allow bulls to propel ETH to the $100 range, stretching roughly from $2,900 to $2,800. Flipping $2,618 into a support floor would allow Ether price to attempt a retest of the $3,000 psychological level. 

On the other hand, if Ethereum price fails to overcome the $2,618 hurdle, it would signal that the bulls are weak, which could be attributed to the uncertain macroeconomic conditions. This development could see ETH price to revisit the $2,190 support floor. 

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Akash Girimath

Akash Girimath is an engineer at core, but is interested in the chaos of the financial markets. Akash is senior report and analyst who also trades cryptos on a regular basis and maintains a small crypto fund for friends and family.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.