Ethereum falls 4% after rejection around key trendline

• Global Ethereum ETFs saw $19 million in net outflows.
• Ethereum Foundation sells 100 ETH for $226,868 DAI following price drop.
• Ethereum Layer 2 Network Activity Hits Record Highs.
• ETH could drop towards the symmetry triangle support after seeing rejection around a key downtrend line.

Ethereum (ETH) fell 4% on Monday after a new round of sales by the ETH Foundation, totaling 100 ETH. Meanwhile, Tier 2 networks are experiencing record levels of network activity despite falling prices.

Daily Market Reasons: Ethereum ETFs Exit, ETH Foundation Sells Again

Spot Ethereum exchange-traded funds (ETFs) globally continued their weekly outflows, posting $19 million in negative outflows last week, according to CoinShares report. US spot ETH ETFs, outpaced by Grayscale’s ETHE exit pressure, were responsible for over 67% of flows.

Following the CoinShares report, the Ethereum Foundation sold 100 ETH for $226,868 a few hours ago on Spot On Chain. The move brought the Foundation’s total sales in recent weeks to 650 ETH, despite criticism from several members of the crypto community.

In particular, the price of ETH during most of the Foundation sales turned out to be weekly peak prices. While most of its ETH sales are too small to cause a market crash, investors can use the ETH Foundation’s activity as a proxy for price peaks over time, leading to a self-fulfilling prophecy.

Despite the Foundation’s selloff, cryptoanalyst HedgeX posted a chart on X showing that Ethereum validators hit an all-time high on Monday. Increasing validators implies increasing decentralization, which is one of the key ethos of Web3.

Meanwhile, Ethereum Layer 2 reached a record of over $10 billion in total value locked (TVL), more than twice Solana’s TVL, according to Leon Waidmann, head of research at Onchain Insights. Apart from TVL, the Layer 2 user base also grew more than 35 times per week to peak at more than 10 million active addresses, according to data from growepie.

ETH Layer 2 Active Weekly Addresses

ETH Technical Analysis: Ethereum Sees Rejection Around Key Trendline

Ethereum is trading around $2,280 on Monday, down 4% on the day. Over the past 24 hours, ETH has seen close to $61 million in liquidations, with long and short liquidations accounting for $54.76 million and $6.06 million, respectively, according to Coinglass data.

Ethereum is trading in a triangle of symmetry dating back to November 2021. After seeing a rejection on Friday around a downtrend line that has been extending since May 27, ETH is falling rapidly after the resumption of traditional markets on Monday.

ETH/USDT Daily Chart

The trendline in the symmetry triangle suggests that ETH could drop to the $2,100-$2,200 range in the coming days. ETH saw similar declines from August to November 2022 and from July to October 2023 before finally staging a rally. ETH could see a prolonged rally around October or November if history repeats itself.

On the way up, ETH is facing resistance around the 2,817 price level. A sustained move above this level could fuel bullish momentum for ETH as it was a critical support level for over four months before turning into resistance following the August 5 market crash. Moving Averages (SMA) also represent potential resistance.

The Relative Strength Index (RSI) and Stochastic Oscillator (Stoch) momentum indicators are below their neutral levels, indicating dominant bearish pressure.

A sustained move below the triangle of symmetry will invalidate the thesis.

In the short term, ETH could drop to $2,261 to liquidate $24.73 million worth of positions.