Ethereum has been on. A declining trend like the rest of the market but the leading smart contract platform has been on the receiving end of one of the most brutal beat downs. The digital asset that had managed to touch the $3,000 level last week had quickly lost its footing which saw its spiraling down once more. However, Ethereum did not establish any significant support, so it had continued to decline.
With the recent decline, the digital asset had crumbled below significant support points. These include the 20 and 50-day simple moving averages which are crucial in establishing support and subsequent bottom for a cryptocurrency. For Ethereum, this has placed significant sell pressure on investors, and sell-offs have continued to rock the digital asset.
Related Reading | Bitcoin Falls Back To $38,000 As Russia Steps Up Bombardment Of Ukraine
One thing to note is the lack of any short-term support for Ethereum. For an asset to dip below its 50-day moving average, it shows reluctance on the part of investors to want to purchase the digital asset, and without any buying pressure, the supply of ETH on the market continues to outpace demand, hence eliminating scarcity and leading to a decline in the value.
This puts ETH on a dangerous path going into the next bear market. As bears exert control over it, a failure to establish any kind of support means that Ethereum will not hold up against any type of resistance, pushing it farther down.
Why Ethereum May Revisit $2,500
The $2,500 is a dreaded price level for investors, especially those who are long the digital assets. This would officially put the cryptocurrency below half of its all-time high value, marking a return into a bear trend. So far, Ethereum has managed to hold off the bears and secure its position above this price point, but with momentum falling so low recently, it is more than likely that ETH will touch $2,500 before there is any type of notable recovery.
ETH trading at $2,631 | Source: ETHUSD on TradingView.com
As noted above, ETH has fallen below the 50-day moving average. For any recovery or bull rallies for that matter, it is important that the asset begins trading above this point. Failure to do so will see that ETH cannot form any meaningful support.
Related Reading | Yearn Finance (YFI) Down 13% Following Andre Conje’s Exit
With the lack of support, the next support level which lies at $2,522 will not be able to put up much of a fight, leaving the position vulnerable. Currently, ETH is trading above $2,600 but a break below this will see it retest this next support level.
It is expected that bears will be successful on the first test of this level. If so, then ETH will likely be testing the $2,400 much sooner than investors would like. However, positions like this also present a buying opportunity, meaning that investors could very well pick this point to begin loading up their bags. In that case, then ETH could be gearing up to retest its first resistance point above $2,600, which is $2,771.
Featured image from Hodlin, chart from TradingView.com
Credit: Source link
