Ethereum price just broke out of the low-$120 but is still likely to fall further
Ethereum has closely reflected the price action of Bitcoin recently, leading ETH to fall off the critical support at $ 140, plunged to as low as $ 116 last midnight before witnessing a major surge to the $ 130 area.
ETH’s strong reaction of nearly $ 116 confirms that this is a strong support area for the cryptocurrency and may even signal that these lows will mark the long-term bottom for Ethereum – a possibility that seems to be confirmed by history.
At the time of writing Ethereum is trading up to more than 4% at a price of $ 130, following Bitcoin’s spike of 10% this morning.
Daily Ethereum price chart. Source: TradingView
One factor that needs to be closely considered in the short term is the fact that Ethereum’s recovery from its 24-hour lows coincided with extremely low RSI levels, historically marked the long-term bottom for crypto.
Popular Twitter analyst Josh Olszewicz said RSI (= 21) has been seen 5 times before, two of which are local bottoms and the others leading to a bullish divergence.
daily $ETH RSI = 21
has only ever been this low five other times, two of which were local bottoms, the others leading to a bullish divergence pic.twitter.com/isR9zdsgH1
— Josh Olszewicz (@CarpeNoctom) December 18, 2019
In addition to the strength of ETH’s technical indicators, its weekly chart may also signal that it will soon see significant price increases in the near term.
Analyst Scott Melker, known as The Wolf Of All Streets, explained that Ethereum’s response to its key support levels on the weekly chart indicates the possibility it will soon see a potential reversal.
Weekly has sparked my interest, to be honest. pic.twitter.com/SAQPq2B1R3
— The Wolf Of All Streets (@scottmelker) December 17, 2019
Ethereum is still likely to fall further
For most assets, investors will enter the downturn to accumulate as much as possible while prices are low. It seems that the Ethereum cows are getting excited about this prospect, but an analyst has warned them to be cautious.
Analyst Andrew Kang, a former digital asset manager, questioned Ethereum’s ability to raise enough capital to drive prices up.
Serious question for ETH bulls – where do you expect additional capital inflows to come from?
Shitcoin funds? No
ETH Maxis? Levered out
Institutions? Definitely not https://t.co/1qOXDH89Ri
— Andrew Kang (@Rewkang) December 17, 2019
Kang argues that based on the current price, it is almost impossible to find retail use for Ethereum or have institutions deploying capital into it the same way they did with Bitcoin.
Kang’s point is quite interesting. Ethereum hardly receives much love from the retail stores that accept cryptocurrencies, since most people who accept cryptocurrencies have chosen to accept Bitcoin.
Institutional investors are also uncertain about the asset. Many in the community regard Ethereum’s difficult value proposition as a barrier to entry.
While Kang remains pessimistic about Ethereum’s hope of revival without major capital intervention, some observers believe that the key lies in the development of a decentralized financial (DeFi) feature. Once ETH locked in DeFi increases, others will likely be drawn back.
Disclaimer: This is not trading advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
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