Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
The price of Ethereum fell into a tension zone after a weak start in January. ETH fell less than 1% in the last 24 hours, and now extends its 30-day decline to around 3.6%. Meanwhile, the price remains above key long-term support, leaving traders torn on the trend.
What makes this setup complex is the balance of risks. Ethereum is trading in a bearish chart pattern, but the position data indicates that the downside may not be as easy as it seems.
Is Ethereum trading in a bearish pattern?
On the daily paper, Ethereum consists parallel model. This is a bullish structure where the price forms a left shoulder, a higher peak called the head, and a lower right shoulder. A break below the neck confirms the disadvantage.
Sponsored
Sponsored
For Ethereum, a close day below the neck required a downward movement of about 9%. On the other hand, a movement of about 12% to the upside will completely invalidate the model.
Want more icon insights like these? Subscribe to publisher Harsh Notaria’s Crypto newsletter here.
Momentum hasn’t helped the bulls either. The relative strength index, or RSI, measures price momentum. When the RSI makes a higher high while the price makes a lower high, a hidden bearish divergence indicates weak trend strength. This is exactly what happened between early December and early January.
Since then, the price has decreased, and has not formed an upward divergence. This keeps collapse risks active rather than resolved.
Therefore, structurally, Ethereum remains vulnerable. But structure alone does not explain everything. The next question is where does the selling pressure come from.
Short selling increases as the holder’s behavior pulls back to support
Data on the chain helps determine who is selling and who is not.
Sponsored
Sponsored
First, HODL Waves. Divide this scale Supply of Ethereum into groups based on how long the coins are held. Short holding periods usually represent speculative money, while longer periods reflect persuasion.
Between January 6 and January 9, the week-to-month push saw a sharp drop in the supply share, falling from 7.44% to 3.92%. This represents a 47% decrease, which explains much of ETH’s recent price weakness.
Meanwhile, the one-day to one-week batch increased its share from 1.34% to 2.21%, an increase of 65%. This is important because this group often sells quickly if the price moves little.
Long-term support is also weakening. Hodler’s measure of net position change tracks whether long-term holders add or reduce risk exposure. While this metric remains positive, buying pressure has clearly slowed. Net inflows decreased from around 179,000 ETH on January 4th to around 135,500 ETH as of January 9th, a 24% decrease in accumulation power.
Sponsored
Sponsored
In simple terms, long-term holders are still buying, but they are buying less aggressively. This reduces protection from damage.
When immediate support fades, attention turns to derivatives, where positions can often determine the short-term trend.
Skew derivatives create the risk of reversal as Ethereum price levels tighten
The derived data show a strong imbalance.
In the larger permanent markets, the cumulative short exposure is about $3.38 billion, while the long exposure is about $1.57 billion. This means that short positions outperform long positions by about 115%. In percentage terms, the market is heavily inclined towards waiting for lower prices.
This is important because a crowded short can fuel upward moves if the price starts to rise. Forced short covering creates automatic buying pressure through the “short squeeze” phenomenon.
Sponsored
Sponsored
This risk is grouped around key levels. Ethereum is currently trading Close to $3,080. The first support level to watch is $3,050, which is one of the most important levels in the near term, supported by several touch points.
Then followed by $2,890. If this daily close breaks below $2,809, the expected decline of 9% will confirm the bearish pattern and complete the break of the neck.
On the upward side, $3,300 is the first level to weaken the bearish structure. A daily close above that area will begin to negate the right shoulder. Any further move towards $3,440 will invalidate the entire pattern and likely liquidate all 7-day short positions, in line with a 12% bounce scenario.
Currently, Ethereum is between an immediate falling support and an increasingly crowded sell trade.
The price of Ethereum has not collapsed yet, but it is not certain. Selling pressure has arrived, long buying has slowed by about a quarter, and short holders remain active. At the same time, the derivatives position leaves the door open to a strong counter-movement.
The next decisive step will come from the price itself. Whether Ethereum falls by 9% or rises by 12% will depend on which party loses its conviction first.
