Ethereum Shows Resilience After Testing Critical Support

TLDR

Ethereum fell below $3,000 for the first time since November, hitting $2,920 before bouncing back to the $3,100-$3,200 range
Key support level between $3,066-$3,160 was broken, where 4.12 million addresses held 4.9 million ETH
Current price action resembles the 2021 pattern that led to ETH’s all-time high
Multi-month inverse head and shoulders pattern is forming, with potential target of $7,000 according to some analysts
Historical data shows ETH typically starts negative in early January but enters a positive streak as February approaches

The price of Ethereum experienced notable volatility this week, dropping below $3,000 for the first time since November before staging a recovery. The second-largest cryptocurrency by market capitalization fell to $2,920 on Monday, marking its lowest point in two months.

The weekend saw Ethereum trading in a range between $3,200 and $3,340 as it recovered from previous lows. However, this stability proved temporary as selling pressure mounted at the start of the week.

Market data revealed a crucial support zone between $3,066 and $3,160, where approximately 4.12 million addresses held 4.9 million ETH. This support level, which had previously held during December corrections, gave way as bears pushed prices lower.

The drop represented a 12% decline from weekend highs, bringing ETH to test its post-election breakout level around $2,900. The market responded quickly to this price point, with buyers stepping in to push the price up by 9% to the $3,100-$3,200 range.

Technical analysis from crypto market observer Ali Martinez highlighted resistance levels between $3,360 and $3,450, where 4.37 million addresses had accumulated 6.47 million ETH. These price points may present challenges for future upward movements.

The most critical resistance level for #Ethereum $ETH lies between $3,360 and $3,450, while key support is found between $3,066 and $3,160. pic.twitter.com/gE0vEW35vb

— Ali (@ali_charts) January 13, 2025

Several traders have noted the formation of a multi-month inverse head and shoulders pattern on Ethereum’s price chart. The left shoulder of this pattern formed around the $2,800 level, with analyst Rekt Capital suggesting that pullbacks near $3,000 could develop into the right shoulder.

Trader Miky Bull views the recent price action as potentially setting up a “perfect setup for a massive reversal.” According to Bull’s analysis, if the inverse head and shoulders pattern plays out, it could target the $7,000 price level.

Adding another layer to the technical analysis, crypto analyst Crypto Bullet drew parallels between current market conditions and Ethereum’s behavior in 2021. During that period, ETH displayed a Double Top pattern before falling below $3,100 support.

$ETH Worst Case Scenario pic.twitter.com/ByDGEah5dk

— CryptoBullet (@CryptoBullet1) January 13, 2025

The 2021 scenario saw Ethereum consolidate for two weeks after losing this support level, before reclaiming it and moving on to reach new all-time highs. Some analysts suggest the current price action mirrors this historical pattern.

Looking at seasonal patterns, data from CoinGlass shows that Ethereum typically experiences negative weekly returns in early January. However, as February approaches, the cryptocurrency often enters a period of positive performance that can last up to six weeks.

Trader Daan Crypto Traders emphasized the importance of looking at quarterly returns for a more comprehensive view of seasonal trends, noting that “the percentages ETH does within its first few weeks of the year are pretty crazy.”

The cryptocurrency currently faces resistance between $3,360 and $3,450, a zone where substantial trading activity has occurred. This price range could prove important for determining Ethereum’s short-term direction.

Monday’s drop to $2,920 tested the resolve of holders, but the swift recovery suggests strong buying interest at lower levels. The bounce from this support level resulted in a 9% price increase within hours.

Transaction data shows that 4.12 million addresses holding 4.9 million ETH were affected when prices fell through the $3,066-$3,160 support zone. This represents a substantial portion of Ethereum holders who may now be underwater on their positions.

As of the latest market data, Ethereum trades at $3,230, representing a 3% increase over the past 24 hours. The price has stabilized above the crucial $3,000 psychological level that was briefly breached earlier in the week.

Recent price action has resulted in the formation of what traders identify as a potential right shoulder in the broader inverse head and shoulders pattern. This technical formation, if completed, could set up the next major move in Ethereum’s price.