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Ethereum Displayed an Extreme 30% Price Move in 15 Minutes

The price of the Ethereum (ETH) on August 2 peaked at $418. After that, it declined by 25% within 5 minutes. In the Binance Futures, ETH dropped to as low as $302 before going back to $383 within 10 minutes.

The whole sequence of events occurred in a total of 15 minutes. Ethereum reached $418, then went to $302, and then recovered to $385. All in all, it recorded a 25% fall and a 27% boost, respectively.

Moreover, two factors seem to have contributed to the extreme price action of Ethereum. According to market structure, the first is the $410 to $420 range has acted as a historical resistance area since 2017. Second, a surprise sell-off at the resistance results in a cascade of liquidations.

The initial decline led to liquidations of over $1 billion worth of Bitcoin (BTC) and Ethereum futures contracts in a short period, as per the data from ByBt. Also, this had become the largest liquidation event since March 13, when the price of BTC plummeted under $3,600.

Last June 2017, the price of Ethereum surged from $90 to more than $400 within 28 days. The explosive rally happened months ahead of Bitcoin’s record-high run up to $20,000. And it was rejected at $420 on Coinbase.

Similarly, the recent uptrend of Ethereum was also rejected at the same level. As soon as ETH hit around $420, it makes an abrupt sell-off across major exchanges. And in several minutes, it experienced a 25% fall.

The cascading futures liquidations exacerbate the price drop. After a long contract gets liquidated, the holder needs to sell the contract, causing more selling pressure.

 

ETH and BTC

Then, the steep rejection marked a blowoff top, according to a global markets analyst, Alex Krüger. He said, “That was a blowoff top in ETH and BTC last night. A blowoff doesn’t have to be ‘the top.’ Silver and gold had a blowoff top last week. See how familiar charts are in the days and minutes preceding the crash.”

Also, Krüger noted that the bigger picture stays as it is and higher highs ahead in 2020 IMO.

However, he highlighted that crypto assets tend to have some blowoff tops in a single cycle because of their highly volatile nature. With that, Krüger stated whether it would be ‘the top’ for Ethereum, still remains uncertain.

Meanwhile, several investors stay optimistic in the trajectory of Ethereum despite its recent market correction. The co-founder of cryptocurrency venture capital firm Spartan Black, Kelvin Kon, explained that Ethereum is leading the market’s uptrend. He is suggesting that the basis of the ETH rally is in anticipation of ETH 2.0.

Kon said, “ETH is leading this charge driven by optimism around the impending launch of ETH 2.0 phase 0 later this month.”

Then, he added that the successful launch of phase 0 might cultivate in a near term peak for ETH and other large caps depending on how hard ETH operates.

Furthermore, ETH 2.0 is a key phase in the development of Ethereum that would soon phase out miners. Also, it optimizes the network to scale, while users stake their ETH to participate in the network and process data.



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