"A $1.7 Billion Liquidation Bomb is Coming"...Ethereum Warned of 'Halving' if it Breaks $2,000

▲ Ethereum (ETH)/AI-generated image

Ethereum (ETH) has been exposed to a series of confirmed technical bearish patterns and signs of rapid whale departures. As a result, it faces the risk of falling below the psychological red line of $2,000.

According to crypto media outlet Cointelegraph on May 20 (local time), if the Ethereum price fails to defend the $2,000 mark, which is the lower trendline of a bear flag on the daily chart, the downtrend is expected to accelerate. A similar collapse occurred last January, causing Ethereum's price to plummet by 41.5%. If a bear flag pattern, which temporarily consolidates within an ascending channel after a downtrend, is completed, the target price could drop by 49% from its current level to $1,075.

Analysts' warnings continue. Analyst Coin Signals stated via X (formerly Twitter) that "Ethereum is on the verge of breaking down from a bear flag pattern," adding that "if it fails to hold the lower trendline at $2,000, selling pressure will continue down to $1,800 or a new low." Another analyst, Keith Alan, also warned to prepare for a dangerous scenario, mentioning the possibility of a confirmed death cross between the 21-day simple moving average and the 50-day simple moving average. Alan added that deteriorating momentum is observed in both daily and weekly Relative Strength Index (RSI) readings, and if support fails to build, technical support levels could sequentially collapse down to around $1,300.

Other indicators and analysts' observations also lean bearish. Analyst Crypto Patel analyzed that Ethereum has lost its major uptrend line and is undergoing validation of a rising wedge pattern, with a downside target of $1,500. CoinGlass data also shows market vulnerability. According to the Ethereum liquidation map, if the price drops below $2,000, there is a significant risk that over $1.7 billion worth of leveraged long positions will be forcibly liquidated in a domino effect across global exchanges.

Amidst this price crisis, the accumulation movements of whales have notably weakened. Glassnode data shows that despite Ethereum's recent rebound to $2,400, widespread accumulation by major wallet holders did not occur. The number of mega whale wallets holding more than 10,000 ETH plummeted to a 10-month low of 1,050. Their 30-day wallet count change fell to minus 70, a level seen in early February. This suggests that large investors have lost mid-term confidence and are reducing risk by utilizing recent liquidity.

The situation is similar for smaller holder tiers. The number of wallets holding between 1,000 ETH and 10,000 ETH decreased to a 9-month low of 4,750 as of May 8. Their 30-day change also hovers around minus 50. The distribution of holdings and lack of conviction among core holders heighten the risk of further price drops if the $2,000 support level breaks. Coupled with declining whale balances and continuous inflows of funds to exchanges, pressure is currently leaning towards the path of least resistance downwards.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*