Ethereum faces possible December selloff amid historical pattern, experts say

Benjamin Cowen predicts that Ethereum could repeat its 2016 pattern and decline in December despite the post-merger changes.

Notably, Ethereum has been showing some bullish momentum recently, even briefly testing and breaking above the critical resistance at $2,700 marked by the 100-day moving average. However, it was quickly rejected as significant selling pressure appeared, leading to a sharp decline.

Over the past 24 hours, the altcoin's price has fallen by more than 2%, rising to $2,552. This development is in line with the widespread sentiment that Ethereum could see another drop before making a sustained rally.

More December drops?

Ethereum could be headed for another downturn, according to a recent analysis by Into The Cryptoverse CEO Benjamin Cowen, citing the historic cycle of 2016 as a possibility. That year, Ethereum faced significant declines in April, August, and December.

In 2016, #ETH There were significant declines in April, August, and December.

In 2024, #ETH There were significant declines in April and August.

There's a good chance it will play out similarly, but with one more addition. #ETH Before the end of the year, the lowest price was in December. pic.twitter.com/xRsJ92aXMP

— Benjamin Cowen (@intocryptoverse) October 23, 2024

In 2024, similar declines were observed in April and August, suggesting further declines could occur by the end of the year, reaching a bottom in December.

Have there been any changes to the fundamentals of ETH?

History often rhymes, but broader market conditions, macroeconomic factors, and ETH fundamentals will be different in 2024 compared to 2016, making it unlikely that this expected decline will actually occur. It is worth noting that it can affect whether or not.

For example, trader pointed out It is believed that macroeconomic conditions, improved fundamentals of Ethereum post-merger, and EIP-4844 could result in a different outcome than in 2016.

In particular, the evolution of Ethereum as a blockchain is different from previous cycles. The trader points out that cyclical trends apply more accurately to Bitcoin, which has fewer structural changes.

Concerns about option expiration and volatility

Additionally, the Ethereum market is currently bracing for significant volatility due to the impending impact of: date of expiry Options contracts worth $1 billion were signed this Friday.

Typically, market makers will steer prices toward a “maximum pain” level to minimize the trader's profit upon option expiration. Ethereum price is currently trading at $2,552, only 1.85% away from its biggest pain point at $2,600.

As of October 22nd, the put-call open interest ratio was 0.95, and a closer look at the put-call open interest ratio reveals a bearish outlook with put and call open interest at 194,050 and 205,155 contracts, respectively.

Fees to encourage networking activities?

Despite the bearish short-term outlook, Ethereum is witnessing a significant reduction in transaction fees, which could lead to increased usage of the network.

According to Transaction fees have recently dropped to an average of $1.63 as of Oct. 23, Santiment said. Historically, fees below $2 have matched the market bottom, increasing user activity and convenience.

In contrast, rising fees, especially those above $10, caused a decline in activity typically seen at market peaks. The current low-fee environment represents a less congested network and a more favorable environment for blockchain activities.