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Ether Up from 100-Day Low, But Bounce Back Lacks Substance
Ether's technical recovery from the 100-day low hit yesterday looks to be a "dead cat bounce."
Updated Sep 13, 2021, 7:42 a.m. Published Mar 19, 2018, 12:40 p.m.
Ether's technical recovery from the 100-day low hit yesterday looks to be a "dead cat bounce."
The world's second largest cryptocurrency by market capitalization, which traded around $740 a week ago, fell to $460 on Sunday – its lowest level since Dec. 11. The 37.8 percent fall looks to be associated with ether-specific news flow and broad-based risk aversion in the crypto markets.
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Last week, an official at the U.S. Securities and Exchange Commission (SEC) said the agency is investigating "dozens" of initial coin offerings (ICOs) – news that seems to have weighed over ether, given the ethereum blockchain serves as a platform for token creation via its ERC-20 standard.
Further, ETH's drop below $500 yesterday coincided with reports that the EOS team is releasing about 400,000 ETH tokens on the market. While the EOS token is built on ethereum, it is widely considered a crypto competitor.
Currently, ETH is trading at $535, having clocked a high of $556 earlier today, according to CoinMarketCap. The retreat from the intraday high suggests the rally from $460 was likely a "dead cat bounce" – a correction in a bearish trend.
Daily chart
The above chart (prices as per Bitfinex) shows that the head-and-shoulders breakdown seen last week confirmed a longer-term bullish-to-bearish trend change.
However, the oversold conditions, as highlighted by the relative strength index (RSI) and the previous's day long-tailed candle (signals bearish exhaustion) indicate ether will likely trade in the sideways manner for the next couple of days.
The upside could be capped around the descending (bearish) 10-day moving average (MA), while the previous day's low of $452 could act as a strong support, given the oversold conditions.
View
- Ether could consolidate in the range of $630–$550 over the next 48 hours.
- Only a daily close (as per UTC) above the head-and-shoulders neckline resistance (former support) of $640 would abort the bearish view.
- Bearish scenario: Repeated failure to beat resistance at $565 (Feb. 6 low) could yield a bigger sell-off to $385 (Nov. 30 low).
Tennis ball in net image via Shutterstock
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Coinbase Sees Crypto Recovery Ahead as Liquidity Improves and Fed Rate Cut Odds Climb
The crypto exchange also took note of a so-called AI bubble that continues to go strong and a weaker U.S. dollar.
What to know:
- Coinbase Institutional is seeing a potential December recovery in crypto, citing improving liquidity and a shift in macroeconomic conditions that could favor risk assets like bitcoin.
- The firm's optimism is driven by rising odds of Federal Reserve rate cuts, with markets pricing in a 93% chance easing next week, and improving liquidity conditions.
- Several recent institutional developments, including Vanguard's crypto ETF policy reversal and Bank of America's greenlighting of crypto allocations, have contributed to bitcoin's rebound from recent lows.
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