Ethereum’s native token, Ether (ETH), continues to face downside risks in a higher interest rate environment. But one analyst believes that the token’s next selloff move could turn into a bear trap as the market factors in the possible release of the Merge this coming August.
ETH to $4K?
Ether’s price could reach $4,000 by 2022’s end, according to a technical setup shared on May 20 by Wolf, an independent market analyst.
The analyst envisioned ETH moving inside a multi-month ascending triangle pattern, which comprises a horizontal trendline resistance and rising trendline support.
Notably, ETH’s latest retest of the structure’s lower trendline could initiate a big rebound toward its upper trendline, which sits around the $4,000-level, as shown below.
Wolf took his bullish cues from a similar triangle setup from 2016, whose formation preceded a major bull run from $1 to $27. Similarly, another ascending triangle occurrence in 2017 coincided with a bullish follow-up, wherein ETH/USD rose 270% to over $1,500.
The Merge vs. low liquidity “death spiral”
Wolf’s fractal-based analysis came as Preston Van Loon, one of the Ethereum core developers, confirmed that the blockchain project’s much-anticipated upgrade to a proof-of-stake consensus mechanism would occur sometime in August.
Wolf noted that Ethereum was setting up a “bear trap,” which would make sense prior to the upgrade, complimenting his technical setup, as discussed above.