The Ethereum price has extended its bearish trend at the start of December, accumulating an approximate 30% drop over the last quarter. According to recent data provided by on-chain analytics firm Glassnode and projections from independent analyst Dom, the asset is currently at a critical crossroads that will define its annual close, debating between defending vital levels or facing a severe correction.
As of Tuesday, the native token tested the MVRV -0.5σ deviation band (teal color), located near the $2,820 to $2,830 range. If a sustained technical breakdown of this support level is confirmed, the asset’s value could descend to the realized price of $2,500, which has historically served as a price magnet during corrective phases. Additionally, the formation of a bearish pennant pattern on the daily chart threatens to trigger an additional 20% drop, projecting the value towards the $2,200 zone.
Current technical indicators reflect market fragility, where MVRV bands are essential for comparing the current quote with holders’ previous movement levels. Historically, losing the -0.5σ band has preceded significant negative movements, such as the 40% drop observed in the month of March, establishing a worrying cyclical behavior pattern. Therefore, defending these levels is vital to prevent deeper liquidation in the crypto asset economy and maintain long-term investor confidence.
Will the market be able to avoid a 20% crash towards new annual lows?
A downward movement towards the critical area of $2,200 would coincide with the 0.786 Fibonacci retracement and a previous demand cluster recorded in April. However, analyst Dom suggests that this decline could mark a local bottom within a falling wedge structure. The resolution of this technical formation is decisive for short-term traders, as, although wedges typically break upward, a failure at this point would confirm the continuation of the predominant selling pressure in the market.
Despite the immediate bleak outlook, there is a latent possibility of recovery if bulls manage to break the upper trendline of the mentioned wedge. If this positive scenario materializes, the quote could be propelled strongly towards the target of $3,550 entering the new year, aligning with various valuation models that consider the asset undervalued. Thus, although the risk of a drop persists, the opportunity for a significant rebound keeps the hopes of the most optimistic investors alive.
