Ethereum has mostly mirrored bitcoin’s run in the recent rally. For the second year, the value of the digital asset reached as high as $3,000 It has had a difficult time achieving this goal, which was previously elusive. Ethereum had difficulty staying above this mark in previous years. It has not been able to maintain its place above e$3K this time.
Ethereum on the Decline
Ethereum, like all other cryptocurrency tokens, is highly volatile and subject to extreme fluctuations in price. The price of Ethereum has fluctuated in the last months but was mostly at the $ 2,600 to $ 2,800=0 range. The recent rally saw the market finally break free from this pattern and start a new trend that saw it surpass the $3K target.
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ETH was unable to maintain the position and this would make this recovery short-lived. The bears put up a strong resistance at $3,000, and the digital asset couldn’t find any significant support. This led to the price dropping below that point, though it was likely to continue its downward trend, given the current indicators.
Below $3k was the lowest trading volume for digital assets. This brought it below its 50-day moving mean. Given their volatility, this is an important fact for cryptocurrency in general. Since buyers are unwilling to purchase the digital asset at prices they did over the past few weeks, it indicates that Ethereum is still a seller’s market. As more coins go on sale, there is likely to be a downtrend.
ETH drops below $3k. Source: TradingView.com ETHUSD| Source: ETHUSD on TradingView.com
However, this does not mean that all is bad. A market like ETH’s can quickly switch up and turn into a buyer’s market, especially when prices are as low as they are right now. Ethereum may see another 10% jump that would cement its position above $3k.
The Market is awash with fear
The Fear & Greed Index had moved out of the fear territory back into a neutral point at the start of the week but this new wave of positive sentiment did not hold. As of the writing of this article, the index moved back into fear, with a score currently of 39. It shows that, despite recent rallyings, investor sentiments have remained more negative than ever.
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Investor sentiment directly affects Ethereum and the cryptocurrency market. It shows when investors will likely put their money into the market. The current index state of fear indicates investors are reluctant to invest in the market. This does not mean that ETH is in bad shape.
Fear and market sentiments fall | Source: Alternative.me
It is possible to buy when investors are most afraid. Whales are known to seize these moments to replenish their pockets. If that is true, then ETH may be able to kick-start another rally. Only a significant absorption of existing supply will allow the digital asset to begin this journey.
CNBC featured image, Chart from TradingView.com