On Tuesday, Ethereum’s (ETH) price fell almost 6% and broke below $2,800. The bulls were eager to get in on the action and purchase ETH at a deep discount. The price of Ethereum is up 2.5% in early trading and appears to be heading back to $3,018.55, recouping Tuesday’s losses.
Ethereum may recover
The price of Ethereum was stung by dismal earnings from Alphabet, Wall Street’s favorite tech stock, with Youtube losing market share to Tik Tok. The situation was quickly balanced and reevaluated by investors. Youtube lost market share to Tik Tok.
As a result of the spillover fall from Alphabet’s disappointment, the price of Ethereum is ripe for the taking, trading in the ASIA PAC open at a juicy discount just below $2,800.00. Bulls swiftly snatched up pieces of the price action and are poised to recoup all of Tuesday’s losses, putting the price back to $3,018.55. From there, it’s only a short distance to $3,163.35. A 20% profit is possible if earnings show positive news.
Trades between USD and ETH close to $3k TradingView
With Facebook’s numbers expected to be released this evening, a turnaround is possible. A huge drop in the Nasdaq is expected, driving cryptocurrencies to new levels. However, Facebook may surprise us with lower user numbers and lower incomes from publicity earnings. The price of Ethereum will fall to $2.695.70 then $2.574, a 10% drop.
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Ethereum Merge is a Concern
There are a few concerns to be aware of, one of which being the approaching ‘Merge,’ which will see Ethereum switch from a proof-of-work to a proof-of-stake paradigm, resulting in a 99.95 percent reduction in overall energy consumption. Bloomberg spokeswoman Mike McGlone.
“The Merge, shifting Ethereum from a proof-of-work model to proof-of-stake, will convert Ether into an equity-like instrument with elegant supply/demand dynamics that could drive significant interest in the asset. Stakers of Ether (owners that validate) will be entitled to a share of future revenue (fees) generated on the network, with EIP-1559 dictating a portion of the fees (about 70%) should be burnt (akin to a buyback) and the rest distributed as a reward (dividend)”
But, as McGlone warned, there’s still a lot that may go wrong with the ‘Merge.’ Because of crypto’s present link to risk-on assets like tech stocks, which have been witnessing a major selloff in April, the price prognosis for the immediate term seems bleak. McGlone is not ruling out Ethereum reaching $1,700. This would be its summer low.
If the stock market declines further and lowers the tide for risk assets, Ethereum could repeat last summer’s performance and revisit about $1,700. Ethereum reached an all-time high of $4800 in November after the weaker, more leveraged long positions had been wiped out. The Federal Reserve is fighting the most severe inflation since 40 years, and Ethereum will face the same headwinds as all risk assets. We see the potential for stock-market reversion as a primary headwind for Ethereum.”
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Featured Image from Shutterstock. Chart from TradingView.com