Ethereum

ETH threatens to drop below $ 3,000 by the end of the year – here’s why

Ether hit an all-time high (ATH) of $ 4,867 in early November, up almost 20% a month later due to increased profit-taking.

And now that the Ether price holds USD 4,000 as an important level of support, there is a greater risk of a sell-off in the form of a variety of fundamental and technical indicators.

Rising wedge of ether

First, ether appears to have broken out of a “rising wedge,” a bearish reversal pattern that occurs when price travels upward in a range defined by two rising – but converging – trend lines.

Put simply, as ether price nears the top of the wedge it risks falling below the pattern’s bottom trendline, a move many technical chartists see as a sign that a downtrend is imminent. The profit target corresponds to the maximum height of the wedge, measured from the breakout point.

Weekly ETH / USD frame chart showing a rising wedge pattern | Source: TradingView

As a result, Ether’s falling wedge target appears to be near $ 2,800, also near its 50-week exponential moving average.

Bearish divergence

The bearish outlook for ether is due to the fact that bears have been putting massive selling pressure elsewhere in the crypto market in recent weeks.

For example, Bitcoin fell 30% for almost a month after setting an ATH of $ 69,000 in early November, much higher than the drop in Ether over the same period. This has led many analysts to describe Ether as a “hedge” against the fall in Bitcoin prices – as ETH / BTC has risen to its highest level in more than three years.

However, Ether’s recent rally coincided with a decline in the weekly relative strength index (RSI), suggesting a growing divergence between price and momentum.

Weekly ETH / USD price chart with divergence between price and RSI | Source: TradingView

Additionally, the recent pullback also caused Ether’s RSI to drop below 70, a classic sell-off indicator.

Dot plot diagram of the Fed

Further unfavorable signs for Ether come ahead of the two-day monetary policy meeting of the US Federal Reserve (Fed), the 14th possible rate hikes next year.

Last month, the Fed announced that it would cut its bond purchases by 15 billion a month. The sustained rise in inflationary pressures prompted Fed officials to “cut back a few months earlier”.

https://twitter.com/Schuldensuehner/status/1470037056596459523?ref_src=twsrc%5Etfw” target=”_blank” rel=”nofollow noopener
“20 central banks will hold meetings next week as inflation continues to rise, with final decisions for 2021 by the Fed, ECB, BoJ, BoE. Central bank balance sheets have risen to ATH levels, but now there might be a difference. “

A Financial Times poll of 48 economists predicts the stimulus will end in March 2022, and most respondents support a rate hike in the second quarter.

The easing period after March 2020 played a key role in pushing the price of Ether up by 3,330%. Therefore, the possibility of a deepening contraction could hold up the current rally, if not the entire bull market.

The market is expecting the Fed’s Monetary Policy Update and Economic Forecast Summary (SEP) this week. At this point, many central bank officials will adjust the “dot plot” chart to favor an earlier rate hike than expected to counter rising inflation.

Join Bitcoin Magazine Telegram to keep track of news and comment on this article: https://t.me/coincunews

Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.

Follow the Youtube Channel | Subscribe to telegram channel | Follow Facebook page

CoinX

Recent Posts

Best New Meme Coins to Join for 2025: BTFD Coin Leads, Popcat Keeps It Purr-fect, and Non-Playable Coin Hits Gamers Hard

Discover the Best New Meme Coins to Join for 2025. BTFD Coin's price rollback offers…

11 minutes ago

Solana memecoins crash while DTX Exchange hits 100,000 TPS on layer-1 blockchain

Discover how DTX Exchange's historic achievement of 100,000 transactions per second on a layer-1 blockchain…

56 minutes ago

Strategic Bitcoin Reserve Expected to Cut 35% of US National Debt by 2049

VanEck suggests the U.S. could reduce its national debt by 35% by 2050 through a…

1 hour ago

The New Lead of Presidential Crypto Council Appointed by Trump Is Bo Hines

President-elect Donald Trump named Bo Hines as the executive director of the presidential crypto council.

1 hour ago

Best New Meme Coins with 1000X Potential: BTFD Coin’s Hot BIG50 Discount As Baby Doge Coin, Dogs Takes Gaming to the Next Level

Explore the best new meme coins with 1000X potential. Learn how BTFD Coin leads with…

2 hours ago

BlockDAG Surges Past $170M as BDAG250 Bonus End Countdown Begins – Aave Targets $400 & Solana Shines with Scalability

BlockDAG crosses $170.5M in presale success with BDAG250 bonus and Whitepaper V3 launch! Solana grows…

4 hours ago

This website uses cookies.