After yesterday’s retracement in the prices of Bitcoin, Ethereum, and other top cryptocurrencies, analysts are already expecting more downside.
One trader suggested that ETH is trading in a textbook broadening wedge formation that will invalidate by being broken to the downside, resulting in a correction to ~$200.
“$ETH / USD H4 TF – Ethereum, we could potentially see a Broadening Formation pattern play out here,” the analyst commented in referenec to the cahrt seen below.
This comes shortly after another trader explained that in failing to pass $250, ETH registered a rejection at a crucial level. The rejection arrived right where there is a technical downtrend that has constrained price action over the past year.
Due to this rejection and the formation of the bearish candle, the analyst suggested that the asset could retrace to $150 come July. Such a move would mark a 35% drop from current prices.
Watch Out Below
Corroborating the bearish sentiment about Ethereum, is Bitcoin bears.
The creator of the world-famous Bollinger Bands indicator, John Bollinger, recently said that investors in BTC should be cautious at the moment:
“The is a Head Fake at the upper Bollinger Band for $btcusd, time to be cautious or short.”
The is a Head Fake at the upper Bollinger Band for $btcusd, time to be cautious or short.
— John Bollinger (@bbands) June 2, 2020
The comment was made in reference to Bollinger Band “head fakes,” when an asset moves dramatically above or below the indicator, before snapping back to it due to a lack of trend formation.
Bollinger is a traditional chartist, but he has made some accurate cryptocurrency calls over the past few months.
After BTC started to correct lower to $7,300 in October, he remarked that there was a “good potential for a Head Fake.” Days later, the cryptocurrency exploded 40% higher in 24 hours.
In the middle of December, he revealed he was expecting a macro breakout in Bitcoin once the asset slid to $6,400. The breakout took BTC to $14,000 in the two months after he made that comment.
Fundamentals Are Skewed in Ethereum’s Favor
Even still, the long-term fundamentals seem to be skewed in the favor of Ethereum bulls.
Defipulse.com, a website that tracks decentralized finance, recently noted that Ethereum finance applications have seen large growth over the past few weeks.
Collectively, they now hold in excess of $900 million worth of cryptocurrencies, from ETH and stablecoins to altcoins.
It’s a trend that shows DeFi is growing, and as a result, so should Ethereum. The founder of finance decentralized app MakerDAO said:
“4 million Dai was just minted with WBTC in a single transaction. This really showcases the latent demand for non-ETH assets, and it’s the beginning of a broader trend of DeFi acting as an economic vacuum that will eventually attract almost all value to the Ethereum blockchain.”
Also bullish, the broader Ethereum network has seen an uptick in transaction fees collected.
Ryan Sean Adams, the founder of Mythos Capital, explained in a recent analysis that transaction fees are somewhat correlated with the ETH price. Should the historical relationship hold, the cryptocurrency is currently 20-40% undervalued.
Featured Image from Shutterstock Tags: ethusd, ethbtc Despite Recovery Rally, Ethereum Is Primed to Fall Towards $200: Top Analyst