Despite Merge Hype, Ethereum Is At Risk Of A Correction
Crypto Briefing | May 19, 2022 02:09AM ET
Ethereum could be bound for another downswing after failing to break past the $2,100 resistance level. Ethereum looks poised for significant losses after failing to overcome a critical hurdle in its trend. Despite the market’s anticipation for “the Merge,” selling pressure could resume if it breaks the $1,700 support level. Ethereum is weakening while trading volumes are falling in the cryptocurrency market.
The second-largest cryptocurrency by market cap looks primed to resume its downtrend after suffering a rejection at the $2,150 resistance level.
Although Ethereum successfully held $1,700 as support, it has not shown enough strength to make a significant advancement. The current market conditions could encourage investors to exit their positions in expectation of lower lows.
Ethereum is expected to complete its long-awaited “Merge” to Proof-of-Stake this year, which could act as a bullish catalyst, but the launch date is likely months away.
Ethereum recently completed its Merge testnets and will next give the update a trial run on the Ropsten testnet. With no final launch date in sight and sentiment in the crypto market still at a low, Ethereum could face a major correction in the short term.
When considering that the governing technical pattern behind Ethereum is a symmetrical triangle, the recent rejection could be followed by a spike in selling pressure.
This technical formation forecasts that after the $2,500 support level was breached on May 9, Ethereum entered a 64% downtrend.
A daily candlestick close below $1,700 could further validate the pessimistic outlook and result in a steep correction to $900.
IntoTheBlock’s Global In/Out of the Money model adds credence to the bearish thesis. It shows that more than 2.24 million addresses are “underwater” on their holdings after purchasing over 26.33 million Ethereum between $2,130 and $2,400.
Get The News You Want
These addresses could sell their assets in the event of another downswing to avoid incurring further losses, adding to the downward pressure.
In this eventuality, transaction history reveals that the most critical support level lies between $400 and $1,330, where 13.26 million addresses hold more than 13.1 million Ethereum.
Given the significance of the supply wall between $2,130 and $2,400, Ethereum will likely have to claim this area as support for a chance of invalidating the pessimistic outlook.
Original Post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.