Despite Ethereum's significant Merge event, a traditional bearish reversal pattern predicts trouble for the ETH/BTC pair in the future.
Since May 2021, the weekly chart of Ether (ETH), the native token of Ethereum, has been creating an inverted cup-and-handle pattern, which suggests a likely collapse versus Bitcoin (BTC).
A bearish reversal pattern called an inverse cup-and-handle is marked by decreasing trade volume. It usually ends when the price crosses below its support line, and the decline toward the level is as long as the distance between the top of the cup and the support line.
Applying the theoretical definition to the weekly chart of ETH/BTC identifies 0.03 BTC as the next negative target, representing a loss of around 55% from the price on September 16.
Alternatively, the ETH/BTC combination may yet result in significant profits in the years to come. Since January 2018, the ETH/BTC pair has been depicting a probable cup-and-handle pattern on the weekly log chart. In other words, a rise of more than 520% from the present price levels, or toward 0.5 BTC in 2023, is possible.
Cup-and-handles are bullish reversal patterns, as opposed to their inverse counterpart noted above, with their upward goals situated at levels equal to their maximum height when measured from their breakout point.
The resistance level of the pattern, 0.08 BTC, is currently being tested by the pair. As of right now, it has been moving lower inside the handle range and is about to retrace toward its lower trendline, which is located around roughly 0.05 BTC, after testing the upper trendline as resistance this week.
The possibility of Ethereum surpassing Bitcoin in terms of market valuation has been nicknamed "the flippening."
According to Joshua Lim, head of derivatives at Genesis Trading, Ethereum is vying with Bitcoin to become the so-called "inflation hedge." Lim referenced Ethereum's August 2021 EIP-1559 release, which added a fee-burning mechanism to its system.
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