Ethereum price prediction after Tom Lee's Bitmine buys 20,000 ETH worth $41.98 million

Tom Lee's Bitmine approaches goal of capturing 5% of total supply with latest 20,000 bits $ETH purchase. However, a bearish flag pattern was confirmed in the weekly $ETHThe /USDT chart suggests that a potential price correction for Ethereum may be imminent.

Bitmine, a technology-focused infrastructure company run by renowned market strategist Tom Lee, acquired another $20,000. $ETH worth $41.98 million over the weekend. The move follows more than 40,000 acquisitions. $ETH In late January, it was valued at around $117 million at the time.

After Bitmine's latest acquisition, the company's total reserves are now around $4.29 million. $ETHis almost 71% complete towards its goal of owning at least 5% of the total circulating supply.

In contrast to the debt-driven acquisition strategy popularized by Michael Saylor's strategy, Bitmine Immersion Technologies (BMNR) maintains a strong, debt-free balance sheet, powered by over $586 million in cash and short-term liquidity.

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But the company's most strategic pivot is its move to active Ethereum staking. By placing that huge amount, $ETH Bitmine stands to generate high profit income in excess of $500 million annually with a functioning Treasury, provided the staking yield exceeds the 2.5% threshold.

When large institutional investors like Bitmine keep gobbling up supply, they usually tend to create a supply shock, which helps support the price floor in the long run.

However, the overall outlook for Ethereum remains volatile, and a number of bearish factors are likely to continue to overshadow the optimistic outlook generated by the large purchases.

First, Ethereum ($ETH) Prices have been on a steady downward trend since mid-January, dropping more than 45% to nearly $1,800 last week. The decline came as the overall market remained gripped by fear, as macroeconomic and geopolitical fluctuations and repeated large-scale liquidations continued to discourage investors.

Second, the Spot Ethereum ETF, which has previously served as a major bullish factor, has experienced consecutive months of outflows since November of last year. These investment products have shed more than $2.5 billion in this period alone, and further outflows could undermine retail confidence and cause traders to re-evaluate their positions.

Third, the total amount locked in the Ethereum network has decreased to $57 billion, significantly lower than the $98 billion recorded last October. A decline in TVL would mean a decline in on-chain utility, which could worsen trader sentiment and further slow the recovery.

On the weekly chart, Ethereum price has fallen below last month’s key support level at $2,800, confirming a head-and-shoulders pattern. The pattern is formed by three distinct peaks, with the central peak being the tallest and the two outer peaks having relatively equal heights. This is widely considered one of the most popular bearish reversal patterns in technical analysis.

Ethereum price confirms head-and-shoulders pattern on daily chart — February 9 | Source: crypto.news

At the time of writing, Ethereum price was trading near $2,000, another important psychological support level that could heavily influence market sentiment in the coming weeks.

A sharp decline below this important floor could trigger an even deeper decline towards $1,000, which represents the next major historical support. The price could also fall to $800, which is a bearish objective calculated by subtracting the total head height from the point at which the price breaks below the neckline of the pattern.

Several technical indicators seem to support this grim prediction. Notably, the MACD line remains stuck below the zero line and is currently trending downward, indicating strong sell momentum, while the supertrend indicator is flashing a clear red signal.

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