In recent weeks, the price of Ethereum has closely followed the performance of Bitcoin, which has been on a downtrend. However, upon closer inspection, it appears that Ethereum may have more bearish fundamentals compared to Bitcoin. One crypto analyst known as Shin Forex recently shared an analysis on TradingView, highlighting some concerning developments in the ETH price.
Decreasing Liquidity and Flow Towards Bitcoin
According to the analyst, liquidity in Ethereum has been dwindling as investors are showing more interest in Bitcoin rather than altcoins like ETH. This lack of interest in Ethereum is reflective of the current market sentiment, causing liquidity to flow toward Bitcoin instead. With this shift in focus, Ethereum is left without a strong support system to prop up its price. Additionally, the ETH/BTC pair recently broke below its support level of 0.05, a critical development according to historical data.
Looking back at previous market cycles, the analyst pointed out that each time the ETH/BTC pair broke below its support level, a significant price crash followed. This pattern has repeated itself in both 2016 and 2019, leading the analyst to predict a further decline in the ETH price. The target price set by the analyst is around $2,500, indicating a potential downward spiral for Ethereum in the near future.
Short-Term Outlook and Price Analysis
As of now, the short-term outlook for Ethereum appears bleak, with the altcoin trending downward within its current channel. Despite this, zooming out to a larger timeframe provides some hope for a potential recovery post-crash. Analyzing the chart from previous market cycles, there is a precedent for money to flow back into Ethereum following a significant price drop. This trend suggests that while an ETH crash may be inevitable, a recovery is expected to kickstart another market rally.
Currently, bears continue to dominate the Ethereum market, dragging the price below $3,000. At the time of writing, Ethereum is trading at $2,975 with a slight decline of 0.36% in the last day, as reported by Coinmarketcap. Despite the current downward trend, historical patterns indicate the possibility of a recovery in the future, leading to renewed market optimism for Ethereum.
While the Ethereum price may be facing challenges in the short term, there is potential for a turnaround based on historical data and market analyses. Investors should remain cautious but also hopeful for a recovery in the near future.
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