Ethereum dropped about 20% in value yesterday following a period of consolidation at around 0.14 on the BTC/ETH market (I use POLONIEX which is the market mover). It is currently trading around 0.125 but we could see more downside. Here’s why.
ETH’s last dump is probably due to a correction from a wild increase in price due to a high demand of ETH to contribute to the last round of ETH-only ICOs, mainly BANCOR and STATUS which, combined, bagged around 250 million USD in ETH.
However, this dump could foreshadow more blood on the chart for the following reasons:
ETH-rich start-ups could dump some of their bag and absolutely crash the ETH/BTC market at any time to protect their ICO money against volatility. Regardless of its popularity, ETH/BTC is fairly illiquid and thus prone to sharp drops;
There aren’t any high-profile ETH-only ICOs currently scheduled (CIVIC is the next big ICO but they also accept BTC) so it’s unlikely ETH price will soon moon like it did in June;
BTC is looking very bullish and this could lead many to drop their ETH bags to hop on the BTC bull-wagon;
ETH is already up considerably on the weekly chart which could mean we might be entering a distribution phase, for those who don’t remember what distribution is, well here’s reminder:
… and here’s ETH hourly chart:
Finally, I am starting to see sketchy videos about “MAKING MILLIONS ON ICOs” pop up around YouTube, which is always a bad sign:
Now the good news is that the bull run is still intact as seen on the chart but there is potential for a huge washout if we were to break support (yellow line on the chart).
In the short term, I can see ETH retesting support and maybe stabbing through a little, however, if support breaks I will hedge my ETH into BTC.
In any case, this is a really BAD TIME TO INVEST IN ETH, you can trade its volatility but I wouldn’t recommend taking a second mortgage on the house to buy ETH right now.
If you really like ETH, way until the price goes back into accumulation.
Trade safe,
Dan @tradealert
I hope so. I'm tired of the ETH shills. Newbies who just discovered crypto think they're crypto gods by riding the pump to $350. So many people dumping money into ETH without even knowing what crypto is or what they will ever use ETH for. I feel like the majority of ETH holders now just want ETH to be the next bitcoin so they can be rich... hence why they're staunchly against BTC. This kind of hype isn't sustainable, and ETH is full of weak hands who don't know jack about crypto and are about to see a rude awakening.
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I agree with you, lots of people are buying ETH way too high thinking they're making a good investment but truth is we might be on the verge of distribution and when it hits, weak hands will panic and sell their expensive bags of ETH at the bottom then complain on Reddit when the market bounce on them. I am writing an article about preparing for the next market cycle, stay tuned!
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