The Ethereum (ETH) token may enter a bull trap after recovering above the $1,000 mark from an 18-month low of $885.

Ethereum Price Draws a Rising Wedge

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First among these indicators is the Rising Wedge, a classic bearish reversal setup that forms after price moves up within a range defined by two rising but converging trend lines. The wedge setting gets further confirmation if the trading volume falls along with the rise in prices.

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Theoretically, a rising wedge resolves after price breaks below its lower trendline and there is a move down to the level for a length equal to the maximum height between the upper and lower trendlines of the wedge.

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Ether has been forming a rising wedge since mid-June, as shown in the chart below.

A four-hour price chart of ETH/USD with a rising wedge setup. Source: Trading View

Therefore, its intermediate slope appears to be to the downside, and a decisive break below the lower trendline could lead to a decline towards $870-$950, depending on where the break begins.

This means a 15-25% decline from the price of ETH on June 13th.

$70M Leaving Ethereum Funds

Ethereum’s bearish sentiment is supported by evidence of a significant outflow of funds from investment funds.

Notably, Ethereum-related investment products recorded $70 million worth of outflows in the week ending June 17th. according to data received by CoinShares.

Notably, this was the eleventh consecutive week of capital withdrawals, bringing the total year-to-date outflow to $458.6 million.

Asset flow. Source: CoinShares

In contrast, Solana (SOL), one of Ethereum’s top competitors in the smart contract ecosystem, has raised $109 million in 2022 for its tied funds. While Bitcoin (BTC) has invested $480 million in its investment products.

Summer DeFi 3.0? Uniswap overtakes Ethereum in fees, DeFi outperforms

CoinShares cited investor concerns about Ethereum’s “merger” with Proof-of-Stake as the main reason for the poor performance of its funds this year.

Ethereum option exercise price: $1,000

Open interest in ETH options on Deribit shows more than $1 billion in Ether, pending June 24th expiration. according to Coinglass data.

Ethereum options open interest at the strike price. Source: Coinglass

The June 24 expiration has the potential to impact Ether’s price behavior, primarily because it is trading just 10% above its preferred strike price of $1,000. In addition, a move towards $1,000 could trigger a rising wedge.

The views and opinions expressed here are solely those of the author and do not necessarily reflect those of Cryptooshala.com. Every investment and trading step involves risk, you should do your own research when making a decision.