Ethereum (ETH) Loses Its Luster and Dips Below $1,100

by
Blockchain
Ethereum (ETH) Loses Its Luster and Dips Below $1,100

Last week, Ethereum experienced a 10 percent increase. According to experts, the ascending trendline in the cryptocurrency could boost its value if favorable market conditions. The price of ETH then fell below the key trendline support level as it failed to maintain its upward movement. On Tuesday, a new negative thesis suggested that the price could test the $1,000 mark.

Ethereum Price Risks Technical Breakdown

The price of Bitcoin/Ethereum has been forming a bear flag in the three-day timeframe since early June 2022. This pattern is considered a continuation of the previous decline, and it occurs when the price moves higher inside a range defined by two parallel trend lines. The bear flag will eventually break below the lower trendline, the last major support level.

A bear flag is a technical analysis term that refers to a significant drop in price equal to the size of the previous decline. For instance, in July, the price of Bitcoin/ETH fell by almost 20%. Its profit target is around 0.0439, around 20% below its previous close.

According to a study conducted by the experts at the Japanese trading academy, bear flags have a success rate of 67% when it comes to meeting their targets. However, Tom Bulkowski, a veteran analyst, believes that the bear flag only manages to meet its target 46 times out of 100 attempts, which is significantly lower than the average.

Pentoshi, an analyst, shared a technical setup suggesting that Ether’s price could be headed for a significant drop. He noted that the support level at 0.036 could act as a support for the cryptocurrency.

Ethereum Down Nearly 4% In Last 7 days to $1,091

The price of Ethereum has decreased by around 4 percent in the past week. Due to the ongoing selloff, the market has been mostly in the red in the last 24 hours. Bitcoin, the world’s largest digital currency, fell 4.27 percent. Other cryptocurrencies, on the other hand, also experienced similar losses.

If the favorable scenario plays out, the bulls will target the $1,200 MA200 and then the $1,300 to $1,700 resistance zones before consolidating above the white trendline and testing the $1,700 mark. Given the various macroeconomic factors that could affect the financial sector, the goal of reducing the risk of a recession is not feasible.

FTX Pressure, CPI Results, and Fed Easing

One of the biggest factors contributing to the selling pressure on cryptocurrencies is the FTX exchange. Investors want to convert their ETH into a high annual yield. A plan that involves placing immense stress on a resource already struggling to maintain a level of support above the local average is not ideal.

As investors await the release of the June consumer price index, a key indicator of US inflation, they will look for hints about the Fed’s plan to ease monetary policy.

Last week, the price of Ethereum reached a high of $1,275. After a brief consolidation, the price reversed and started to fall. After suffering a severe breach of the $1,175 support level on Tuesday, ETH immediately fell. The price then proceeded to decline below the support at around $1,050.

What Could Happen to Bitcoin in the Months Ahead?

According to an economist, no major events will negatively affect Bitcoin’s price. For instance, the Fed is expected to raise its interest rate by 75 basis points, which the market has priced in.

The June consumer price index print is expected to trigger a selloff in the traditional market. However, this selling pressure will not turn into a “trend-defining” event and will spill over to the crypto market.

The key to a potential recovery is on traditional equities. Once the market starts to trend higher, the crypto market will find a bottom. However, many believe this asset will continue to suffer from the pain in the coming months.

Adam Robertson

Adam is outgoing young lad who likes adventures and discovering new things. Despite his boring life, He loves writing about cryptocurrencies and exploring what blockchain technology can do for the coming digital world where all adventures will be virtual.