The Ethereum price has been closing mirroring the performance of Bitcoin recently and since the Bitcoin price has been on a downtrend, the ETH price has followed. However, Ethereum on its own seems to possess more bearish fundamentals compared to Bitcoin, leading crypto analysts to believe that the second-largest cryptocurrency by market cap will fall further from here.
Ethereum Poised To Crash Further
A crypto analyst known as Shin Forex took to the TradingView website to share an interesting analysis of the Ethereum price. The analysis, which focused on the ETH/BTC chart, unveiled some concerning developments in the ETH price.
The analyst explained that during this time, the liquidity in Ethereum has been dwindling. Instead of flowing toward altcoins like ETH, it is instead flowing toward Bitcoin. This suggests growing disinterest in Ethereum from investors and as liquidity flows to Bitcoin, Ethereum has nothing propping it up at this time.
Furthermore, the crypto analyst explains that the ETH/BTC pair has now broken below its support of 0.05. Now, this drop below its support level is important given what has happened each time that it broke. Shin Forex points back to the last two market cycles, one in 2016 and one in 2019, of the ETH/BTC breaking below its support.
Both times that this has happened, a crash in the price has followed, before it can rally again. The crypto analyst does not expect this time to be any different and believes that ETH/BTC will fall below 0.04. If this happens, it will send Ethereum spiraling and the analyst has set a price target of around $2,500 for this.
Can ETH Price Survive The Crash?
In the short term, the Ethereum price doesn’t look to good, especially as the altcoin is currently trending downward inside its current channel, according to the crypto analyst. However, zooming out to the larger timeframe can help give an inkling of how the ETH price could perform after the crash.
Looking at Shin Forex’s chart of the last two times that a formation like this occurred, it has also set a precedent for money to flow back into Ethereum. In November 2016, the price had crashed but in a few months, there was a massive recovery as ETH/BTC rose to a new all-time high.
Source: TradingView.com
A similar thing happened the next time in 2019, with the crash coming ahead of a market rally, albeit a bit slower at this time. So, if this trend holds, then the ETH crash is inevitable. However, a recovery is expected that will likely kickstart the beginning of another massive rally.
For now, bears continue to dominate the Ethereum market and have successfully dragged the price down below $3,000. It is trading at. $2,975 at the time of this writing, with a small 0.36% decline in the last day, according to Coinmarketcap.
ETH price falls below $3,000 | Source: ETHUSD on Tradingview.com
Featured image from Quora, chart from Tradingview.com