Ethereum’s Bear Market May be Coming to an End: Bullish Breakout on the Horizon

Ethereum’s performance has been underwhelming compared to Bitcoin this year, with the cryptocurrency experiencing a 22% decline from its 2024 highs. As a result, Ethereum has dropped to $3,200, nearing its lowest level since December 2024. The decline can be attributed to the Ethereum Foundation’s continued selling of its large ETH holdings and the network losing market share to competing chains like Tron and Solana.

Historical Trends Suggest a Bullish Breakout

Despite the current bear market, several factors suggest Ethereum may be poised for a bullish breakout. Historically, Ethereum’s price has performed well in February, with the cryptocurrency posting positive returns every February since 2019. Its average performance in February since 2017 has been 17%. While past trends do not guarantee future results, there is growing optimism that Ethereum could see gains this February.

Additionally, data shows that Ethereum balances on centralized exchanges have decreased in recent days, falling to 16.04 million from this month’s high of 16.09 million. A decline in exchange balances suggests that holders are moving their ETH to self-custody wallets, a bullish signal indicating reduced sell pressure.

Whale Accumulation and Technical Analysis

Furthermore, Ethereum whales have continued to accumulate the coin, with 13 whales taking Monday’s crash as a sign to accumulate. This signals significant accumulation activity and suggests that these large investors expect the price to rise. One prominent buyer of Ethereum is Donald Trump’s World Liberty Finance, which now holds ETH worth almost $200 million.

Techincal analysis also suggests a potential breakout. The weekly chart shows that Ethereum has formed an inverse head and shoulders pattern, with the neckline at $4,085. This pattern is a widely recognized bullish reversal signal. A confirmed breakout above the neckline could signal further gains.

Ethereum is also supported by the 50-week and 100-week moving averages, and has moved to the fourth part of the Elliot Wave pattern. This phase is usually followed by the fifth one, which is often a bullish sign. If Ethereum breaks above the inverse H&S neckline at $4,085, it could rally further, potentially reaching the psychological level of $5,000.

Key Factors to Watch:

  • Historical performance in February: Ethereum has posted positive returns every February since 2019, with an average performance of 17% since 2017.
  • Decline in exchange balances: Ethereum balances on centralized exchanges have decreased, suggesting reduced sell pressure.
  • Whale accumulation: 13 whales have accumulated Ethereum in recent days, signaling significant accumulation activity.
  • Technical analysis: Ethereum has formed an inverse head and shoulders pattern, and is supported by the 50-week and 100-week moving averages.

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