On Monday, Ethereum (ETH) broke above the $1,900 level for the first time since Wednesday, seeing its total market cap briefly surge to $230 billion before losing some of its gains. However, some analysts are not quite sold on the fresh ETH rally, as they posit that ETH’s bullish momentum could just be a bull trap.
ETH could deceive the bulls
According to a X post by crypto analyst Nonzee on Monday, ETH is currently setting the final trap before eventually skyrocketing to an ambitious price target of $7,000. As ETH hit $1,920 earlier on Monday, the next logical target for the digital asset is $2,000.
However, that’s exactly where the ETH bull trap is likely to show up. According to Nonzee, ETH will first drop to $1,800 and then finally hit the psychologically important $2,000 level. If Bitcoin surges to $70,000, then ETH could even climb to $2,200.
Later, ETH will likely see 7-10 days of uninterrupted selling, resulting in the cryptocurrency slumping to a local low of around $1,300 to $900. A fall to $900 would mean approximately 50 percent reduction in its market cap – almost as low as $115 billion.
Once ETH hits $900, that’s when its real bull run will actually begin. The analyst added that the “real buy zone” for ETH lies between $900 and $1,300. The analyst shared the following ETH weekly chart, showing the upcoming bottom for the cryptocurrency.
Meanwhile, fellow crypto investor Dr. J Rould shared the following ETH weekly chart which shows the cryptocurrency potentially breaking out of a descending triangle. The digital asset has avoided falling below the strong support indicated by the red-line.
For the uninitiated, a descending triangle is a bearish continuation pattern formed when price creates lower highs while repeatedly testing a horizontal support level. The pattern is confirmed when price breaks below support, signaling that sellers have gained control and a further decline may follow.
On-chain data supports ETH bull case
While the possibility of a bull trap is non-zero, other analysts opine that ETH is ready to embark on a bull run despite its poor performance during the majority of the year. According to whale data obtained on Thursday, ETH whales are once again in profit, preparing the conditions ready for a bullish rally.
Capital inflows to spot ETH ETFs continue to pour in, signalling sustained institutional interest in the digital asset. That said, some warning signs still linger, as ETH showed a liquidity pattern on July 9 that had previously preceded a 30 percent price drop.
