Friday 30 September 2022
Home / none / The floppening? Ethereum price weakens post-Merge, risking 55% drop against Bitcoin

The floppening? Ethereum price weakens post-Merge, risking 55% drop against Bitcoin

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

ETH/BTC weekly price chart featuring inverse cup-and-handle breakdown setup. Source: TradingView

An inverse cup-and-handle is a bearish reversal pattern, accompanied by lower trading volume. It typically resolves after the price breaks below its support level, followed by a fall toward the level at a length equal to the maximum height between the cup's peak and the support line.

Applying the theoretical definition on ETH/BTC's weekly chart presents 0.03 BTC as its next downside target, down around 55% from Sept. 16's price.

Can ETH/BTC pull a Dow Jones?

Alternatively, the ETH/BTC pair could nevertheless deliver some large gains in the years to come.

On the weekly log chart, the ETH/BTC pair is painting a potential cup-and-handle since January 2018. In other words, a rally toward 0.5 BTC in 2023 is on the table, up more than 520% from current price levels.

Unlike its inverse counterpart mentioned above, cup-and-handles are bullish reversal patterns with their upside targets located at levels equal to their maximum height when measured from their breakout point.

Veteran analyst Tom Bulkowski notes that these patterns have a 61% success rate of meeting their upside targets.

For instance, the cup-and-handle pattern that formed on the Dow Jones chart during the Great Depression of the 1930s and 1940s — wherein the cup took nine years to develop and the handle another four years — reached its upside target in the 1950s, as shown below.

Dow Jones Industrial Average cup-and-handle pattern. Source:

Potentially, ETH/BTC could now be in the handle stage of a similar cup-and-handle pattern, as shown via the shaded purple descending channel area in the chart below.

ETH/BTC weekly price chart featuring cup-and-handle breakout setup. Source: TradingView

The pair awaits a breakout move above the pattern's resistance level of 0.08 BTC. For now, it has been fluctuating lower inside the handle range, eyeing a pullback toward its lower trendline at around 0.05 BTC after testing the upper one as resistance this week.

Flippening or floppening?

Ethereum's potential to overtake Bitcoin by market capitalization has been commonly dubbed as "the flippening."

Ethereum is competing with Bitcoin to become the so-called "inflation hedge," according to Joshua Lim, head of derivatives at Genesis Trading. Lim cited Ethereum's EIP-1559 update from August 2021 that introduced a fee-burning mechanism into its protocol.

Related: Academic research claims ETH is a ‘superior’ store of value to Bitcoin

According to Ultrasound.Money, Ether's supply growth now stands at minus 1.43% per year. In other words, the token could be becoming "disinflationary" with time. Lim argues that it makes Ether an attractive alternative to Bitcoin among institutional investors.

But many argue against the flippening narrative, including Rahul Singh, the co-founder of Defi platform FINtokens. He told Cointelegraph Bitcoin would continue existing as a "digital gold" while Ethereum would become an "Internet 2.0" project.

As of September 2022, Ether's market cap is $175 billion compared to Bitcoin's $372 billion.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Every investment and trading move involves risk, you should conduct your own research when making a decision.

Original Article

About Jude Savage

Check Also

Ethereum Merge was ‘executed flawlessly,’ says Starkware co-founder

As the dust settled over the Ethereum network’s highly-anticipated transition to proof-of-stake (PoS), Eli Ben-Sasson, the co-founder of Starkware, gave his thoughts on its execution and potential for the future. Speaking to Cointelegraph’s Gareth Jenkinson at the Token2049 event, Ben-Sasson shared his thoughts on the current situation post-Merge and how it affects layer-2 projects like Starkware. In addition to that, the executive also gave his thoughts on the adoption and interest for layer-2 products and the crypto winter. Looking back at the Ethereum Merge’s execution, Ben-Sasson rejoiced that the transition was flawless and said things happened as they should. The executive explained that: “The most important thing is that it was executed flawlessly. Everything that was supposed to happen did happen. And none of the things that people were worried about did happen. And that's terrific news.”Additionally, the executive also highlighted the importance of the new Ethereum netw..

Leave a Reply

Your email address will not be published. Required fields are marked *