All the top 10 cryptocurrencies are trading in the red as the dreadful sentiment over the weekend continues to take hold. The entire cryptocurrency market has lost over $50 billion of its market capitalization since the weekend decline engaged a new gear into the red zone. Both Bitcoin (BTC) and Ethereum (ETH), the leading crypto assets have cumulative losses of more than 10%.
Ethereum took a dive in the hours following negative news and has so far struggled to regain any upside momentum. It dipped to nearly touching the $500 mark which would have opened a threat of going below that level and a truly abyss opening up. In a difficult May and June, ETH has on several occasions tested the trendline and fear and panic-selling all over the market is driving prices into the ground.
ETH/USD is currently trading at $526, down by 8% over 24 hours. Today’s price decline is somewhat sharper compared to the drops over May and June. On June 10, 2018, Ether opened trading at $594 against the US dollar. However, it quickly plunged to lows of $511 before rising to close at $526. The coin has touched yesterday’s low prices, though it has only risen to a high of $534.
Although no major negative movement has been witnessed in the last few hours, the overall scenario remains bearish. The current atmosphere is similar to the March decline that culminated into ETH hitting a YTD all-time low of $363 reached on April 1, 2018.
It’s slightly positive for Ethereum as it trends above its support line of $522. It’s important because if this level was destroyed and the coin broke below $500, then it would drop to lows of $485. And after that, it could go all the way to lows of $400. The expectation is that ether bulls will find support to anchor and avoid further declines. However, it could still happen if any more negative trends were introduced over the next 24 hours.
With such an atmosphere surrounding the market, one of the questions we ask is whether ETH can rise as fast as it has dropped.
The general decline in 2018
The all-time high price ETH reached according to data on CoinMarketCap is $1432 reached on January 13 (was higher on some exchanges). Since then, the coin has declined, losing more than 70% in value over 2018.
After hitting a low of $363, Ethereum rallied to gain by over 120% in a month to reach a high of $835 on May 6th. So in essence, the coin can rise in a similar fashion or better if the market rallies.
Why the sudden decline
Over the weekend, the market was hit with the news that the regulatory authorities were preparing a crackdown on cryptocurrency. The anticipated clampdown comes as government regulatory bodies asked for trading data from major exchanges. The authorities are said to be concerned about possible market distortion and price manipulation. The Commodity Futures Trading Commission (CFTC) is also not keen on the dispute between exchanges like Coinbase, Bitstamp, and Kraken and the CME.
There was also negative news from South Korea that pointed to a hack targeting Coinrail crypto exchange. The hacker transferred over 70 percent of digital assets from the exchange to a cold wallet.
How fast can Ethereum Rise?
Ethereum has declined to low prices before, as witnessed during the March/April bearish market. Even though the short-term outlook isn’t great, the expectation is that the crypto has enough support to rally to new price levels. It also is still the top platform for dApps and smart contracts and major upgrades like Casper and sharding.
The only danger for Ethereum is if it breaks below $500. If it does, then an upside could be tricky short-term.
Cryptocurrencies, especially coins like Ethereum don’t usually do extremely huge jumps within short intervals. It thus means that for it to touch early May prices, the bulls will have to ensure the coin doesn’t trade below its $522 trendline.
Ethereum is likely to struggle, and a clawback above $600 won’t happen over a few days. The situation surrounding the CFTC could take days and sentiment may linger south for a while. However, should an upside materialize, we could see prices correct rather swiftly?
For investors, this presents an opportunity to dip in and get some ETH on the decline.