The Reality of the Ethereum Price Drawdown: Loss of Investor Appetite or Poor ETF Performance
On 5 August there was a strong crypto sell-off amounting to more than over $510 billion. Several top cryptocurrencies including bitcoin and ETH were affected. As a fact the prices of bitcoin and ETH fell to their 5-month lows. However, the August mass sell-off is the second this year as there was another one in March. However, market indications show that the August sell-off was not just crypto –specific. It also affected the equities market.
Crypto Market Analysis: Has the Crypto Bull Market Run off Steam?
The current cryptocurrency’s sluggish prices has created fear among many investors who think the bull market might have come to an end. Whether or not the depressed crypto market marks the end of the bullish period or is just a temporary correction will be verified in the coming days or weeks. However, the coming United States monetary policy will also suggest the direction the crypto market will take. As an example, if the Federal Reserve cuts interest rates while growth persists the bull market may continue. However, based on previous crypto market trends the current bull outlook will persist until the third quarter of 2025.
One reason some analysts believe that the bull market may be weakening is the recent drop in prices of around the top 50 cryptocurrencies. To illustrate, some analysts have pointed out that ETH’s recent price drop was caused by lack of investor appetite in the asset. It was not caused by the on-going outflows in the Ethereum ETFs, as some experts have suggested. As a fact, since the launch of Ethereum ETFs in the United States on 23 July the price of ETH has decreased by around 26%. However, during the period the ETH ETFs recorded a total net outflow of $420.5 million.
ETH struggles are not far from over if we consider its price performance during the past weeks. Even its present price direction does not give hope to the investors. On the 19th of August there were several permutations in terms of ETH forecast. On that day it retested the $2,680 several times but failed to breach it. After its last attempt and failure to break out of the channel it entered a downward trajectory. By that time it faced several hurdles at $2,720 and $2,880, which signalled the need for caution among traders and other investors.
A few days later ETH continued to show bearish momentum as the bulls seemed to have lost the appetite. The altcoin continued to linger below the 100 SMA. This is because after its retreat from the $2,680 resistance level it settled near the $2,620 support level. A fall below that level would push its price further down. However, it could find support at the $2,600 which coincided with the 50% Fibonacci retracement considering the swing high of $2,682 and a low of $2,514.
In the end, this scenario unfolded as the ETH price dropped below $2,600 support level. As of 20 August it is trading at $2,576 after losing by 0.3% within the previous 24 hours. Sadly, it has lost much over the last few weeks. For instance it has lost by 26.4% within the last 30 days.
Ethereum Short term Forecast
Let’s use the 24 hour and 7 day charts to analyze ETH’s possible moves. The following 24 hour chart is showing indecision within the market.
Ethereum 24-hour Chart – CoinGecko
As we observe on the above price chart there are two consecutive gaps among the last three bearish bars which may indicate that the downtrend could be coming to an end. The presence of a pin bar at the bottom of the trend indicates a possible bullish reversal. The fact that the two bars after the pin bar are within its range denotes a possible strong uptrend.
ETH Weekly Chart – CoinGecko
At the time of writing the weekly price chart has not confirmed a bullish reversal yet. However, the last bar is resting on the $2.570 support level which creates a high probability that ETH may surge in a few hours or days. Unfortunately, if the bulls fail to hold strongly at that price level it may plunge further down below $2,550 and $2,500 levels. It is mostly likely, though, that the bulls will defend these price zones to avert any chances of further price falls.
However, on the other time frames ETH remains neutral with a bearish cue. For example, the ETH/USDT pair has formed a bear flag pattern within the ascending channel on the 4-hour chart. If it breaks above the channel it may rally towards the $2,900 level. Some analysts believe that ETH will reach $3,000 by September. For those interested in purchasing ETH, Ethereum Kopen remains a popular option among investors looking to enter the market.
Ethereum Market Sentiment: What the Future May hold for ETH
The current state of the market may indicate a possibility that the ETH price may rise soon. At the moment most altcoins are trading at price ranges witnessed in 2023 and 2020. During these two years the prices of most of these altcoins, such as ADA/USDT were near their bottom points. Therefore, this may also indicate that ETH is close to this year’s bottom. As such, that may create a good buying opportunity for some. However, there is always a need for confirmation before making any investment.
