Crypto News

Textbook Pattern Predicts Ethereum Will Plunge Over 20% if $220 Is Lost

ethereum

Ethereum’s price action may be textbook indecision, yet an analyst said that the asset is moving ever closer to a breakdown.
Ethereum Could Plunge Lower 
According to a trader, Ethereum is on the verge of breaking down. He shared the chart below, noting that ETH is trading in a textbook “Chauvashov fork” pattern. The pattern implies a drop to $175 will take place if the formation is broken:
“If this Chuvashov fork breaks, ~$175 is the target. If you want some protection, its probably a good time to buy some put options since volatility is so extremely low and options are cheap.”
Ethereum price chart shared by cryptocurrency trader “Edward Morra” (@EdwardMorra_BTC on Twitter). Chart from TradingView.com
There are some fundamentals that may also be threatening ETH’s outlook.
Former Messari head of product Qiao Wang noted that Ethereum users have been subject to high fees recently. He cited a personal experience, which purportedly resulted in him paying over $10 for a single Ethereum transaction:
“I’ve changed my mind after using a dozen of Defi platforms. So long as ETH 2.0 is not fully rolled out, there’s an obvious opportunity for a highly scalable blockchain to dethrone Ethereum. Paying $10 transaction fee and waiting 15 seconds for settlement is just bad UX.”

I’ve changed my mind after using a dozen of Defi platforms. So long as ETH 2.0 is not fully rolled out, there’s an obvious opportunity for a highly scalable blockchain to dethrone Ethereum. Paying $10 transaction fee and waiting 15 seconds for settlement is just bad UX. https://t.co/vXAAFET3YK
— Qiao Wang (@QWQiao) June 28, 2020

Fate Tied to That of Bitcoin
Ethereum’s fate is notably tied to that of Bitcoin, though. That’s to say, whatever direction BTC trends in the medium term, ETH should follow.
Just look at the Coin Metrics data below of the 180-day Bitcoin-Ethereum correlation, which is nearing all-time highs.
180-day Bitcoin-Ethereum correlation data shared by CoinMetrics. The chart shows that the correlation between the two assets is well in the positive, reaching ~0.9. 
Fortunately for holders of the altcoin, the fact that BTC has held the $9,000 region for so long is making analysts optimistic.
One such analyst is Mike McGlone — a senior commodity strategist at Bloomberg Intelligence that often covers the cryptocurrency market.
As reported by Bitcoinist previously, McGlone wrote on July 3rd:

“Volatility should continue declining as Bitcoin extends its transition to the crypto equivalent of gold from a highly speculative asset, yet we expect recent compression to be resolved via higher prices.”

This came shortly after he said that BTC’s recent increase in active users should correspond with a rally towards $12,000.
Notably, Ethereum has also seen a spike in the number of active users, largely due to the decentralized finance (DeFi) craze.
Blockchain analytics firm Santiment, in fact, reported that the number of active addresses is reaching two-year highs. Simultaneously, the number of daily confirmed ETH transactions has begun to tick over one million.
Assuming Ethereum usage also affects ETH’s price and if the correlation between ETH and BTC holds, the asset may reject the expectations it falls to $175.
Featured Image from Shutterstock
Price tags: ethusd, ethbtc
Charts from TradingView.com
Textbook Pattern Predicts Ethereum Will Plunge Over 20% if $220 Is Lost

How useful was this post?

Click on a star to rate it!

As you found this post useful...

Follow us on social media!

Write a Comment

Related Crypto News

Monero’s Hashrate Experienced Its Largest Single Day Gains Ever
Monero has experienced its biggest single day gain in hashrate since its creation back in 2014. August 6, Monero...
Bitcoin Plunges Under Pivotal $11.5k Support: What Do Analysts Think Is Next?
Bitcoin is slipping lower after peaking at $11,950 just the other day. This marked the second major rejection at...
Price Analysis 8/7: BTC, ETH, XRP, BCH, BSV, LTC, ADA, LINK, BNB, CRO
Bitcoin and altcoins might consolidate or correct marginally for a few days before a possible breakout to the upside....
California’s Attorney General Warns People to Be Wary of Crypto Scams
California authorities recently came out with a fresh cautionary statement on crypto crime. Xavier Becerra, California’s attorney general, recently...
California’s Attorney General Warns People to Be Wary of Crypto Scams
California authorities recently came out with a fresh cautionary statement on crypto crime. Xavier Becerra, California’s attorney general, recently...
German Authorities Confiscate $30 Million in Bitcoin From Pirate Movie Site
German authorities, with the help of the U.S. Federal Bureau of Investigation (FBI), have confiscated about $30 million in...

Featured Crypto News

BTC Averages Over 1 Million Active Addresses as ETH Transaction Fees Hit $2M Daily
Bitcoin averaged over a million daily active addresses in the past week for the first time since January 2018....
Two Macro Calls That Could Propel Bitcoin to $14,000 This Year
Bitcoin may hit $14,000 in the coming quarter. The analogy appears out of two extremely bullish calls made for...
Investors Dollar-Cost Averaging Bitcoin Since 2017 Made a 61.8% Return
Data shows investors who dollar-cost averaged into Bitcoin even since the $20,000 peak are profitable. Researchers at Coin Metrics...
Grayscale Investments’ Ethereum Trust Filed With the SEC to Obtain Reporting Status
The digital currency asset manager Grayscale told investors on Thursday that the firm has publicly filed a Registration Statement...
This Bitcoin Metric Just Dropped 4%—And It’s Bullish For The Market
Bitcoin has rallied by approximately 25% over the past two weeks as Ethereum has wrested the market higher. The...
Bitcoin Price Climbs to $11,200, But Three Factors Hint at a Pullback
The price of Bitcoin spikes to $11,200 but three key factors suggest that a short-term pullback is likely as...