Will the bears send the prince of cryptos back below $1000? – In a market context that has hardly changed since mid-September, let’s admit that we are bored on the crypto planet. And as proof, the example of an Ethereum (ETH) magnetized around $1400 would show an almost neutral trend in the very short term. And all in all, it could be good news in relation to current risk factors. But on the other hand, the prince of cryptos is still enduring a bear market since his last ATH in November 2021 and is rooting himself closer to blowing out his first candle.
For this market point concerning ETH, I am going to venture a bet that could make some Journal du Coin readers cringe. Not because I am an anti-crypto, but because I make sure to offer you the reality of the moment according to the latest technical analyzes and the fundamentals that are currently available to us. And I have a feeling we could hit the wall with the possibility of Ethereum prices seeing three digits again.
To support this market scenario so dreaded by many cryptocurrency investors, let’s take a closer look at the weekly and daily charts using one of the most popular technical indicators, the Ichimoku Kinko Hyo.
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Ethereum in weekly units – A high risk or flat week?
The lack of animation on the evolution of Ethereum since mid-September could be a blessing in disguise for the bulls. On the one hand, we would once again postpone the recovery of its bear market. And on the other hand, it would leave the door open for a return beyond $1400. But as we speak, hesitation prevails over the direction of prices in the near future. With the fear of another uneventful week.
That being said, let’s not forget the main points of this bear run. First of all, the status quo of ETH and Chikou Span prices under the Kumo (Ichimoku Cloud), would probably play overtime for a few months. Then, the Kijun continues to decline for the third consecutive week. Not to mention that prices move away from the Tenkan and the descending line. Finally, the last point concerns the significant thickness of the Kumo projected for the first quarter of 2023. And precisely, it could weigh heavily in the perspective of a trend reversal.
By lining up these unfavorable technical signals one after the other, the bears would be favored by the forecasts. In this case, we would go for a return towards the $1000 support, close to its lows for the year. And in a second time and helped by a Bitcoin that would potentially drop $ 20,000, the prince of cryptos could find himself stripped of his four figures.
Ethereum in daily units – Prices moving away from Kumo
While we had believed in a crossing of Ethereum prices above the daily Tenkan, it was finally aborted at the start of the week. This prevents them from coming back into contact with the Kumo. And at the same time, the Chikou Span imitates them with an earlier lag of 26 sessions.
With a Kijun dropping sharply and approaching the Tenkan, this would not bode well for a favorable outcome. So much so that we would retest the $1200 support again. A breakthrough below this mid-level would bring the prince of cryptos back to where he was in mid-June. And imagine that the market context were to deteriorate seriously, I would fear that this critical and symbolic level would not hold water. This is why cryptocurrency investors should not rule out the possibility ofan ETH near the support of $700, or even far below at $450.
In the idea of a second throwback on the 1200$ like the one of last September 22, the bulls would offer themselves an unexpected chance to review a rebound beyond $1400, a threshold that swings between support and resistance. However, the Kumo and the downline would make it difficult to unleash additional upside potential for anything other than a technical rebound.
In summary, as long as we do not identify signs of improvement in the factors supporting inflation at a high rate for more than four decades, we should not count on the FED to slow down its monetary tightening. Especially since the rate of decline in consumer prices in the United States is relatively slow to allow risky asset classes to experience a new lease of life.
In this sense, cryptocurrencies risk drinking the cup again. Not only do they remain correlated with equity indices (more particularly the Nasdaq which is not at the end of its troubles). But in the medium to long term, the FED would not have a sufficient margin of safety to reinstate QE or quantitative easing as before. Because precisely, inflation below the 2% target could no longer be the usual norm for structural reasons.
Based on this harsh observation, Ethereum’s bear run since its last ATH in November 2021 would not be far from a new purge, which itself would probably manifest itself in a phase of capitulation. Although this prospect is unpleasant, it must be admitted that the true favorable trend reversal points are still light years away.
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