Ethereum could drop to $2.2K, claims trader as ETH forms classic bearish setup

• ETH/USD pair could crash down to $2276, according to Peter Brandt.
• Ether is about to form a death cross setup.
• Evergrande fiasco-led global market crisis hits ETH/USD.

JAIPUR (CoinChapter.com) – Veteran trader Peter Brandt called for Ethereum’s native cryptocurrency Ether to drop to $2276 amid a market-wide selloff that stung ETH/USD spot rates. Mr. Brandt based his bearish prediction for the number 2 cryptocurrency market cap upon a head and shoulders pattern.

In detail, the ETH/USD pair’s recent bearish momentum led to a technical setup with three peaks (the middle one being the highest, along with two lower similar heightened peaks). As per technical analysis, the said formation signals a bullish-to-bearish trend reversal.

Although not overly pessimistic about ETH/USD’s near-term trend, Mr. Brandt quoted the head and shoulders setup to predict a near 24% drop from current prices (around $3000 at writing). Such a scenario strongly looks to play out amid an impending death cross formation on Ether price charts.

Related: Here’s why a veteran analyst called Dogecoin a “double-headed monster.”

Death Cross

Possibilities of a much deeper correction intensified for ETH/USD after the pair’s 50-day exponential moving average (EMA) indicator (in green) looked to dip below the 200-day EMA (in blue), leading to an impending death cross setup. Death crosses are classic bearish setups the precede significant asset price drops.

Related: Ethereum is looking at a 15% ETH crash according to this technical setup combo.

For ETH/USD, the death cross formation looks to occur near $3326. With prices already down 24% from the $3681 local high, the said occurrence could lead to the pair retesting the $2200-2300 range.

Ethereum Buckling Under Evergrande Led Crisis

In the wake of China’s potential housing bubble crisis, ETH/USD prices slumped sharply on Sunday in tandem with the broader cryptocurrency market and other risk-on asset markets.

Chinese property developer Evergrande undergoing a liquidity crisis largely triggered the selloff. Evergrande holds debt obligations of more than $300 billion to creditors. That also includes a critical interest payment deadline on its offshore bonds, arriving on Sept. 23.

Prominent media outlets noted that if Evergrande topples, it could bring many banks down with it. Similar to the Lehman Brothers fiasco during 2008’s housing bubble crisis in the United States.

Ethereum’s native blockchain asset doesn’t trade in direct correlation with global markets. But its 30-day correlation with Bitcoin — the leading digital asset exposed to macroeconomic fundamentals — sits near 0.85. So consequentially, Ether felt the heat of the downturn in global markets.