Ethereum Price Targeted at $250 by Traders After 16% Fall
Recently, Ethereum (ETH) price did not escape the carnage as the crypto market displayed a significant correction. The top altcoin marked a 12% decline during the past day as the price plummeted to $331. At the same time, Bitcoin (BTC) price dropped by 6.3% to find support near $10,300.
The drop happened following a head and shoulders pattern becoming apparent on the daily timeframe, and the price slip into a sharp downtrend over the last four days.
There are three possible reasons behind Ether’s poor performance – a technical rejection, Decentralized Finance (DeFi) bull run’s slight deflation, and weakening momentum.
Correction on Ether
After Ether’s weekly candle opened on September 21, some technical analysts suggested the chances of a bearish retest.
Cred, a pseudonymous trader, stated that Ether might retest the $390 level before showing a potential pullback.
He said, “Weekly time frame still looking like a bearish retest of the previous range ($390s). Bitcoin is looking better on the weekly, but also pulling back from daily resistance.”
After that, Ether’s price fell from $372 to as low as $331 across major cryptocurrency exchanges.
A full-time trader at the Amsterdam Stock Exchange, Michael van de Poppe, mentioned a similar point. Van de Poppe noted that the $385 to $395 resistance range hinted that a strong rejection might be on the cards.
Eventually, the rejection of the key multi-year resistance area placed the selling pressure on Ether to intensify. Van de Poppe explained that the $385 to $395 level is saying ‘no Bueno.’
He added, “Continued range-bound movements. If we get to $280 and/or $250, I’d be happily looking for longs.”
However, even before Bitcoin began to pull back sharply, Ether was already experiencing a clear rejection at a key resistance level. It seems like BTC’s rejection at $11,000 only amplified the near-term downturn of Ether.
DeFi Correction Adds to the Pressure
Over the last three months, the Ethereum network has prospered as user activity skyrocketed, and different on-chain metrics demonstrated significant Ether demand.
The extreme growth of the DeFi sector led to an overwhelming demand on the Ethereum blockchain network. And it reached the point where it began to clog, and transaction fees boomed to new highs.
According to data from Cryptofees.net, Ethereum is processing approximately $3.77 million in daily fees to miners. On the other hand, Bitcoin has been settled around $369,000 in daily fees on average in recent weeks.
Aside from that, most of the optimistic sentiment around Ethereum rotated in the fast growth of the DeFi space. So, if DeFi tokens crashed, it would likely place more selling pressure on Ether.
For the average, DeFi tokens recorded a 40% decline during the past week. Even DeFi giants, such as Yearn.finance (YFI), fell 46% over the last ten days.
Market Momentum
Ether was already lagging behind Bitcoin way before the BTC price fall. The price further stagnated within the last two weeks, while BTC somehow rallied from $10,300 to $11,100.
As of now, the Bitcoin price is down by about 16% from its yearly peak. Then, Ether has dropped from over 30% from $488.95 to $342.
