Ethereum - "FOMO" is likely to punish buyers
For about a month now, we repeated that bullish calls for a trend reversal and bottom were false. We continue to stick to this narrative also today. Indeed, recently, we noted that the price of Ethereum started to appear attractive for short position (re)entry in the range between 1500 USD - 1600 USD and above.
We believe drying up liquidity in the market suggests trouble ahead with institutional players utilizing the recent bounce to sell their positions. In addition to that, higher interest rates, a weakening economy, and regulatory obstacles continue to threaten the cryptocurrency market.
As a result, we think the bear market rally nears its end. Therefore, in accordance with our assessment, we would like to set a price target for ETHUSD at 1 000 USD.
Illustration 1.01
Illustration 1.01 shows the daily chart of ETHUSD. Yellow arrows indicate three bullish breakouts and one bearish retracement. White horizontal lines indicate support and resistance levels.
Systemic cracks
The list of affected companies and concise description:
1. Voyager (bankrupt) - defaulted on $350 million in the U.S. dollar-pegged stablecoin, USDC , and 15,250 bitcoin .
2. Zipmex (bankrupt)
3. 3 Arrow Capital (bankrupt) - filed for bankruptcy and its founders went missing.
4. Celsius Network (bankrupt) - went bankrupt after freezing over 151 000 Bitcoins locked away from its 1.7 million users.
5. CoinFlex - (limited withdrawals)
6. SkyBridge Capital - cryptocurrency fund (suspended withdrawals)
7. Coinbase (investigated by the SEC) - probed over the issuance of securities and insider trading.
8. Binance (investigated by the SEC) - probed over Tether stablecoin and insider trading.
Technical analysis - daily time frame
RSI, MACD, and Stochastic are all bearish. DM+ and DM- are bullish. Overall, the daily time frame is bearish.
Illustration 1.02
The chart above shows the relationship between price and volume. It can be seen that after bullish breakouts, volume declined, hinting at the temporary evaporation of buyers. Now, we want to see a build-up in volume accompanying a declining price to confirm our bearish thesis.
An ugly reminder of the downtrend
The list of affected cryptocurrencies:
Luna - stablecoin (-99%)
CEL - cryptocurrency (-84%)
Cardano - cryptocurrency (-82%)
BNB - cryptocurrency (-57%)
XRP - cryptocurrency (-89%)
BTC - cryptocurrency (-64%)
ETH - cryptocurrency (-65%)
SOL - cryptocurrency (-82%)
Dogecoin - meme coin (-90%)
Polkadot - cryptocurrency (-84%)
Matic/Polygon - cryptocurrency (-72%)
*The list shows values from 30th July 2022. Declines are measured from all-time-high values.
Technical analysis - weekly time frame
RSI is bearish. MACD strives to perform bullish crossover. Stochastic is bullish. DM+ and DM- are bearish. Overall, the weekly time frame sends mixed signals; it lags behind the daily time frame.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
We believe drying up liquidity in the market suggests trouble ahead with institutional players utilizing the recent bounce to sell their positions. In addition to that, higher interest rates, a weakening economy, and regulatory obstacles continue to threaten the cryptocurrency market.
As a result, we think the bear market rally nears its end. Therefore, in accordance with our assessment, we would like to set a price target for ETHUSD at 1 000 USD.
Illustration 1.01
Illustration 1.01 shows the daily chart of ETHUSD. Yellow arrows indicate three bullish breakouts and one bearish retracement. White horizontal lines indicate support and resistance levels.
Systemic cracks
The list of affected companies and concise description:
1. Voyager (bankrupt) - defaulted on $350 million in the U.S. dollar-pegged stablecoin, USDC , and 15,250 bitcoin .
2. Zipmex (bankrupt)
3. 3 Arrow Capital (bankrupt) - filed for bankruptcy and its founders went missing.
4. Celsius Network (bankrupt) - went bankrupt after freezing over 151 000 Bitcoins locked away from its 1.7 million users.
5. CoinFlex - (limited withdrawals)
6. SkyBridge Capital - cryptocurrency fund (suspended withdrawals)
7. Coinbase (investigated by the SEC) - probed over the issuance of securities and insider trading.
8. Binance (investigated by the SEC) - probed over Tether stablecoin and insider trading.
Technical analysis - daily time frame
RSI, MACD, and Stochastic are all bearish. DM+ and DM- are bullish. Overall, the daily time frame is bearish.
Illustration 1.02
The chart above shows the relationship between price and volume. It can be seen that after bullish breakouts, volume declined, hinting at the temporary evaporation of buyers. Now, we want to see a build-up in volume accompanying a declining price to confirm our bearish thesis.
An ugly reminder of the downtrend
The list of affected cryptocurrencies:
Luna - stablecoin (-99%)
CEL - cryptocurrency (-84%)
Cardano - cryptocurrency (-82%)
BNB - cryptocurrency (-57%)
XRP - cryptocurrency (-89%)
BTC - cryptocurrency (-64%)
ETH - cryptocurrency (-65%)
SOL - cryptocurrency (-82%)
Dogecoin - meme coin (-90%)
Polkadot - cryptocurrency (-84%)
Matic/Polygon - cryptocurrency (-72%)
*The list shows values from 30th July 2022. Declines are measured from all-time-high values.
Technical analysis - weekly time frame
RSI is bearish. MACD strives to perform bullish crossover. Stochastic is bullish. DM+ and DM- are bearish. Overall, the weekly time frame sends mixed signals; it lags behind the daily time frame.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
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