This analyst believes that Ethereum may lose 80% of its value


According to a recent Bloomberg article, John Roque of 22V Research believes that Ethereum could drop to $420, a loss of 80% of its current price, and here’s why.

Ethereum may drop 80%

The trader believes that Ethereum, currently trading at $2,000, is about to break the support zone and will likely drop below $420. Roque drew attention to a price range where $3,580 is the high and $2,000 is the minimum.

With Ether dipping below $2,000, it is no longer within the range specified above and will start to drop to the next significant chart support around $420.

Source: 22v Research

As the second largest cryptocurrency is rapidly losing value, it has fallen below all moving averages, including the 50, 100 and 200 day lines. The downward movement of the indicators mentioned above is a significant bearish factor for any asset.

Ethereum is also oversold on both the weekly and daily charts, according to Roque, so it cannot recover for the foreseeable future.

ETH/USD trades aroun $2k. Source: TradingView

While the analyst claims that Ethereum is basically “above” key support levels for the second largest cryptocurrency in the market, they can still be seen. On the weekly chart, for example, traders have yet to test the 200-week moving average support.

Related Reading | Bitcoin Indicator Hits All-Time Low Not Seen Since 2015

Increase in ETH exchange supply

Santiment, an on-chain data provider, gives us an insight into what Ethereum’s (ETH) price action could be next. On an 8-hour chart, large short positions have been built up for Ethereum at $2,000, according to the data provider.

However, according to Santiment, this usually doesn’t work with the lowest, and a little squeezing is likely to occur. As a result, the price of Ethereum may rise again.

ethereal

Data shows funding rates history. Source: Santiment

The ETH exchange supply is another item to consider. Santimento observes:

“While we saw a nice drop in supply across exchanges over the last year or so, May 1, 2022 saw a huge spike in supply across exchanges as people rushed out of their positions, which is clearly reflected in the price itself.”

As a result, any future increase in the exchange supply will cause another decrease. This indicates that investors are panicking and have given up completely. Although the situation seems dire, this may be an excellent time to take on new roles.

Related Reading | Ethereum Hashrate Breaks All-Time Highs, Will Price Follow?

Featured image from iStockPhoto, Charts from TradingView.com

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