Ethereum Slips to $2.7K – Why ETH Could Test $2.5K
Ethereum is on the move, having dropped to the $2,535 level. A declining trend like the rest of the market, but the leading smart contract platform has taken one of the most brutal beatings. The digital asset, which had reached $3,000 last week, quickly lost its footing, sending it spiraling down once more. However, because Ethereum failed to gain significant traction, it has continued to fall.
The digital asset had fallen below critical support levels with the recent decline. These include the 20-day and 50-day simple moving averages, which are crucial in establishing support and, ultimately, a bottom for a cryptocurrency. This has put significant sell pressure on investors in Ethereum, and sell-offs have continued to rock the digital asset.
One thing to keep in mind is that Ethereum has no short-term support. When an asset falls below its 50-day moving average, it indicates investor reluctance to purchase the digital asset; with no buying pressure, the supply of ETH on the market keeps outpacing demand, removing scarcity and leading to a decline in value.
This puts ETH/USD on a perilous path as it enters the next bear market. As bears gain control, an inability to establish any support means that Ethereum will not withstand any resistance, pushing it even lower.
Why Ethereum Could Return to $2,500
The $2,500 price level is feared by investors, particularly those who are long on digital assets. This would officially reduce the cryptocurrency’s value to less than half of its all-time high, signaling a return to a bear trend. So far, Ethereum has managed to hold off the bears and maintain its position above this price point, but with momentum so low recently, it is more than likely that ETH will fall below $2,500 before making a significant recovery.
As previously stated, ETH has begun to fall below the 50-day moving average. It is critical for any recovery or bull rally for the asset to begin trading above this level. If this is not done, ETH will be unable to form any significant support.
Because of the lack of support, the next support level, $2,522, will be unable to put up much of a fight, leaving the position vulnerable. ETH is currently trading above $2,600, but a break below this level will cause it to retest this next support level.
It is anticipated that bears will pass the first test at this level. ETH will most likely test $2,400 much sooner than investors would like if this is the case. On the other hand, positions like this present a buying opportunity, which means that investors may decide to start loading up their bags at this point. In that case, ETH may be preparing to recheck its first resistance level above $2,600, which is $2,771.
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