Ethereum's Merge on Sep. 15 turned out to be a sell-the-news event, which looks set to continue.

Notably, Ether (ETH) dropped considerably against the U.S. dollar and Bitcoin (BTC) after the Merge. As of Sep. 22, ETH/USD and ETH/BTC trading pairs were down by more than 20% and 17%, respectively, since Ethereum's switch to Proof-of-Stake (PoS).

Multiple catalysts contributed to Ether's declines in the said period. First, ETH's price fall against the dollar appeared in sync with similar declines elsewhere in the crypto market, driven by Federal Reserve's 75 basis points (bps) rate hike.

Second, Ethereum faced a lot of flak for becoming too centralized post-Merge.

Third, institutional investors, or "smart money," also reduced exposure to the Ethereum-focused investment vehicles in the day leading up to and after the Merge.

Ethereum funds witnessed $15.4 million worth of capital outflows from their coffers in the week ending Sep. 16, according to CoinShares' weekly report.

Placing these fundamentals against Ether's technicals versus Bitcoin presents a similarly bearish setup.

On the three-day chart, ETH/BTC has dropped by nearly 25% after topping out at 0.085 BTC, a level that coincides with its long-serving resistance level of 0.081 BTC.

Now,the pair eyes an additional drop toward its multi-month ascending trendline support, as illustrated below.

The trendline support falls in sync with 0.06 BTC, a level that has served as a pullback zone in 2022. In other words, another 10% decline is on the table.

As a rule, the bearish continuation pattern resolves after the price breaks below its lower trendline and then falls by as much as its maximum height. Hence the bearish target sits near $700 by the end of this year, down 45% from today's price.

Conversely, a pullback from the triangle's lower trendline could have Ether rise toward the upper trendline, which means a rally toward $1,775, or a 35% gain from current price levels.

ETHUSD in Midst of a Corrective Leg at TL

Sep 22 2022