From time to time, people begin to panic due to the fall of Ethereum. This process is associated with completely natural market factors such as supply and demand. That is why, in cases where Ethereum has fallen, there is absolutely no need to panic. Before any reaction to a changing situation, you need to analyze the state of affairs as carefully as possible, and only after that take certain steps.
Quite often there are situations when the price of Ethereum fell on the stock exchange, which is why hundreds of people began to get rid of cryptocurrency en masse. And after the rise, they complain that they were deceived, and someone artificially rigged the fall. Situations can be very different, and in each individual case the causes and results of the fall may vary.
Why is Ethereum falling?
If you see that Ethereum has collapsed, then you need to understand the reasons for its fall. There are a huge number of factors that influence the Ethereum price, but only a few of them are really worth paying attention to:
- Dump. Mass sale of crypto by very wealthy bidders. It is carried out by prior agreement by a whole group, because it is impossible to crash the course solo. Usually preceded by a pump - an unjustified increase in cost.
- News. There is always something happening in the cryptocurrency market, which is why you may notice regular fluctuations.
- Players. Often, very wealthy players are turned off from working with cryptocurrencies on exchanges for various reasons. They may put an obscene amount of tokens up for sale, causing supply to outstrip demand for some time.
If you approach the situation wisely, even the strongest drop in exchange rate can give you huge profits. In the worst case, you can minimize losses through a timely, competent reaction.
Content
- State of affairs on the market with Ethereum (ETH)
- So why does Ether keep falling?
- We need to move on
We present to you a translation of an article from one of the foreign blogs about cryptocurrency. We can say that this is the cry from the soul of an Ethereum investor. Why does Ether continue to depreciate in value? Who is to blame for this?
What to do if prices drop sharply
Any drop in cryptocurrency is associated with certain events, so you need to initially find them. Even if initially it seems that the situation smells like a fry, then under no circumstances should you give in to panic and try to sell coins for the money that is offered to you. After the rate begins to fall, you need to take the following set of steps:
- identification of reasons for cost reduction;
- considering the upcoming short-term prospects and assessing the level to which a collapse will occur;
- searching for funds to purchase tokens at their lowest point;
- purchasing ether with 70% of available money (30% must be inviolable so as not to lose all your funds);
- waiting for a rise for subsequent sale.
If everything is done correctly, then your earnings from the fall in the exchange rate will be greater, the stronger the temporary collapse occurs. Ethereum now has a very confident position, so even significant drawdowns will not give confidence that it will fall against the dollar or altcoins.
Popular exchanges and exchangers
If you urgently need to get rid of existing tokens that are falling in price, then there are 2 options: dump them on the exchange or through a special exchange service. In such situations, the conversion speed is highly mobile, whereas in the exchanger you are guaranteed to receive the amount indicated by the seller, but on the exchange your offer may not be accepted.
Exchanges where the majority of Ether trading takes place:
- Poloniex;
- YoBit;
- LiveCoin;
- EXMO;
- BitFinex.
The most popular exchangers:
- 60sec;
- AlfaCashier;
- X-Pay;
- Arbitcoin;
- BestChange.
Both options eliminate the need to understand the reasons why the collapse occurred. The causes of the fall and its consequences remain outside your field of vision.
ETH/USD is approaching all-time highs
Chart made in TradingView
Chart made in TradingView
ETH/USD continues to grow after a successful retest of the previous range ($4000).
On the daily timeframe, ETH came close to reclaiming the last of the daily support/resistance levels on the daily timeframe at $4480-4610. Technically, this is a reasonable area to trim some position size after buying on the $4,000 bounce, but we see scope for larger gains given the ETH/BTC situation.
A slightly slower scenario could see some consolidation between the daily resistance cluster at $4,480-$4,610 and the weekly range high at $4,000. However, while this makes sense on paper, we are not too keen on this setup, given that it involves another $4,000 retest. If the market is really strong, then the (already) weekly retest should be enough to take the daily resistance.
Daily resistance $4480–4610 has also been tested previously.
The catch is that current levels offer perhaps the worst risk/reward ratio for fresh longs. Take a look at the chart: the price is almost touching the upper limit of the structure. However, this is not the level at which we would take a closer look at selling, given the proximity of new highs and the setup in ETH/BTC.
To summarize, ETH/USD looks strong. A refutation of the strength thesis could be a close below $4,000 on a significant timeframe. New record highs look likely. However, the risk/return ratio at the time of writing is very doubtful, given that the market is hitting the daily resistance of $4480–4610. However, this is not the level from which we would expect a significant downward reaction. Target levels for continuation of the trend if the mentioned resistance is taken are round values above $5,000.
Hack Bithumb
The largest drop in the price of Ethereum was due to hackers who hacked BitHumb and pocketed huge amounts of money. The exchange itself is small, but it was here that the cryptocurrency ether was traded in huge volumes - more than 13.5% of the total volume of tokens. Why the attack was carried out on this particular exchange, what information was leaked and how much crypto was stolen is known only to the developers, and each affected user received 100,000 Korean won (87 USD).
After this situation, all exchanges took care of their protection systems, qualitatively increasing the reliability of all transactions within the system. Moreover, now this question is especially acute for everyone. Subsequent hacks of such projects are still possible, but this will require much more conditions, and there are people on each exchange to ensure protection from external factors.
BTC: level ~$55 thousand withheld
Chart made in TradingView
The chart was made in TradingView
BTC/USD continues to trade within the weekly cluster of $55.8–60 thousand.
We said last week that it could be viewed as a range, and the market seems to agree.
After a brief raid below the previous week's lows, the latest weekly candle closed above the lower limit ($55.8K) of the range. This usually heralds a move to the high of the range ($60K).
On the daily timeframe, the price recovered above the previously broken down level of ~$57 thousand. This is a positive sign. Short-term market structure remains bearish (absent a new higher high), but a recovery above the breakout level is constructive.
Even with some strength on the weekly and daily timeframes, Bitcoin/USD does not look like the most attractive long trade today. First, there is technical resistance at $60 thousand (with daily and weekly structures in the $60–63 thousand area). Thus, the risk/reward profile for new longs does not seem attractive to us at the time of writing. Secondly, if the goal is to position the market for its strength, then Ethereum is currently demonstrating strength in a much more obvious way in both pairs.
If we step back somewhat from short-term levels, the market is still bound by a range. As we will discuss below, Bitcoin/dollar does not currently have the initiative. The “best case scenario” for BTC/USD today is continued consolidation without losing the bottom that is being formed.
On the other hand, this is also generally a good thing, since it creates the conditions for betting on the impending ETH breakout (before losing the entire deposit when the correlation with Bitcoin jumps back to 1 on the decline).
ICO ban in China and other harmful factors
One of the first and most significant situations due to which the cryptocurrency (bitcoin) collapsed was the ban on conducting ICOs in China. There were many reasons for such a step on the part of the government, but the result was clear - after the rollback it took more than 7 months to recover.
There are other large-scale situations due to which the price of tokens may fall unexpectedly:
- sanctions from one of the leading countries (Germany, France, USA, China, Russia, Canada or Singapore);
- natural disasters;
- detention of the project creators by law enforcement agencies.
News about cooperation with law enforcement agencies of certain countries deserves special attention. In this case, the cryptocurrency temporarily becomes cheaper (up to several months), but the situation quickly normalizes. Ordinary people buy coins for their own purposes from those who are looking for new secure systems for illegal activities.
ETH/BTC is preparing to exit a multi-month range
The chart was made in TradingView
Once upon a time, we devoted half of our technical analysis on ETH to the USD pair, and the other half to the BTC pair. But then nothing meaningful happened in ETH/BTC, and this situation lasted for seven long months. Now, that may finally be about to change.
ETH/BTC on the weekly timeframe is preparing to leave the range in which it spent 7 months. It is now forming a larger high in a smaller near-term range, and the target level on breakout would be at least the weekly range high at ₿0.084.
Although the ₿0.084 level is also the first logical resistance, we expect that if the current breakout is successfully completed, the market will likely move higher.
The logic is simple: the result of leaving the state of equilibrium after 7 months of trading in the range can hardly be a movement of only 10% above the local maximum. Large consolidations are usually followed by large movements, so we believe that if the momentum continues, the ₿0.084 level is unlikely to provide significant resistance.
As for significant target levels, the first of the most obvious is ₿0.1.
To summarize, the market is preparing to exit a huge range in the context of an almost 2-year upward trend. This is an important event. We expect the trend to continue; failure of the pattern would be catastrophic.
Should we expect a fall or can we buy crypto with all our hard-earned money?
Almost every day, investors wonder whether Ethereum has fallen in price for subjective reasons or whether a total decline can be expected. In the short term, the reason for the drawdown does not matter at all, because experts are more likely to favor a stable increase in value. For 2022, the developers plan to implement the following ideas that will allow the course to further strengthen:
- expanding the capabilities of the site;
- increasing transaction speed;
- additional improvement of the security system;
- cooperation with a large number of online platforms selling goods or services.
Thus, you should not particularly count on the rate falling in relation to other cryptocurrencies or fiat money. Today, this particular token is considered the most promising among all coins, because its growth is characterized by increased stability, and the platform is constantly being improved by experienced programmers.
Traders are switching from trading Bitcoin to Ethereum
According to THE BLOCK data, traders in May 2022 traded more Ethereum than Bitcoin on the futures market.
The growth in activity in #ETH futures in May exceeded the growth in activity in #BTC futures.
- growth in trading volume in ETH futures = +95% y/y
- growth in trading volume in BTC futures = +30% y/y
