Cryptocurrency Analysis

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Igni et ferro

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Consuetudo est altera natura

[IFX_Selena]

Ethereum could drop to $3,000 for three good reasons



Ethereum may continue its downward movement and fall as low as $3,000, and there are three reasons for this. The main altcoin hit its all-time high last month, and has dropped nearly 20% in a few weeks due to the market crash.

At the moment, Ethereum is holding at the turn of $4,000, and this is the most important support level, but there are already concerns that this support level will be broken soon. Ethereum will begin its impulse fall, which will be facilitated by further sales and panic in the market.


Bearish divergence

At the moment, the situation of interception of the initiative by bears can be observed on the market. Bitcoin fell by almost 30% in a month, and then the entire altcoin market turned out to be in bearish gloves. Many analysts predicted the glory of the hedge asset to the ether in relation to the price of bitcoin. However, according to many forecasts, the market will experience a bearish winter and the fall of Ethereum will continue.


The Fed

This week's two-day meeting will discuss the U.S. Central Bank's cut of more than $120 billion in asset purchases per month to increase solvency and flexibility.

This could serve as a negative wake-up call for Ethereum. The Fed said in November that spending on bond purchases would be cut by $15 billion a month, and the final stimulus would end in the summer of 2022.

This meeting of the Federal Reserve System may negatively affect the price of Ethereum. In March 2020, the Fed's monetary policy contributed to an increase in the price of ether by more than 3,000 percent, now we can observe a diametrically opposite situation and a fall in the price of the main altcoin.

Also, at Tuesday's meeting, the Fed will briefly announce its economic forecasts for 2022 and will give its forecast for the formation of cryptocurrencies next year.


Bearish pattern

At the moment, we can observe a situation where Ethereum should exit the ascending wedge - this is a bearish pattern that can be observed when the price of an asset goes up, and two ascending trend lines become the catalysts for this. If the Ethereum price is near the top of the wedge, then the asset may sink and break through the milestone below the lower line of the pattern. This may mean that Ethereum will correct and go down, and this will be an impulse signal of large price losses.







Vitaly Kolesnikov
Analytical expert of InstaForex
© 2007-2021

[IFX_Selena]

Bitcoin is teetering on the edge: How the current correction differs from the fall in May


Bitcoin is still very shakily balancing in the range between the support zone of 46,934.61 - 47,848.69 and the resistance of 51,697.58. On Monday, the lower limit stood, today it is also standing, which gives a chance for recovery.

But the scenario is very close in which the price may collapse into the region of $40,000 - $42,000 per coin. The main question that is now frozen literally in the air: are we already in a bear market?


Mass liquidations in the futures market

The capitalization of the global cryptocurrency market after the fall of bitcoin over the last day has decreased by 6.44% and is hovering slightly above $2.12 trillion.

During the previous collapse on December 3, there was a surge in the liquidation of bitcoin positions. Short positions in BTC futures worth $235 million and long positions in the amount of $846 million were forcibly closed. Then, in two days, the BTC spot price collapsed from $51,000 to $42,000. At the same time, on December 4, there was a collapse of open interest in bitcoin futures from $23 billion to $17 billion.


Fear of players in the spot market

Nevertheless, the last drop in the price to almost $45,000 on Tuesday did not entail similar liquidations. Notably, the spot market seemed more affected as lower trading volumes and higher market fear make investors skeptical about what to do next.

Now we see that even the sideways position in which bitcoin could move, as usual during periods of uncertainty, is a big question. Market participants try not to make sudden movements and, most likely, are waiting for new drivers.


A fall in December is not a fall in May.

Don't panic! Experts suggest comparing bitcoin's current price trajectory to the May drop in prices from a network point of view. The key difference between now and May is that strong hands are now buying from weak ones, while strong hands turned into weak ones in May.

In addition, if you look at the BTC HODL wave for +1 year, then approximately 54.6% of all coins in circulation did not move in +1 year. The indicator is currently down 8.8% from a local high of 63.4% set in September 2020. However, there are signs of a rise in the indicator that could indicate a BTC supercycle if the upward trend continues.


The Fed will help solve the dilemma

The results of the Fed meeting will be announced on Wednesday evening. Earlier, we mentioned a report by Bloomberg Intelligence Senior Commodity Strategist Mike McGlone that the Fed's decisions could affect Bitcoin and Ether.

But tomorrow, the rhetoric and tone of statements by the American Central Bank can determine the position of bitcoin relative to the support zone 46,934.61 - 47,848.69 and set the direction, perhaps even before the end of the year.









Ekaterina Kiseleva
Analytical expert of InstaForex
© 2007-2021

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Igni et ferro

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Aurea mediocritas

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Memento mori

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Consuetudo est altera natura

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Aurea mediocritas

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Memento mori