Ethereum, the second-largest cryptocurrency by market capitalization, has seen its price decline by 5.87% over the past 24 hours to $1,681.50. This steep single-day drop comes on the heels of a broader multi-week downtrend for ETH, with the asset down 9.04% over the past week and 11.76% over the past month.
In this technical analysis, we'll examine the key metrics behind Ethereum's latest price action and what they could mean for traders and investors.
To start, Ethereum's market capitalization now stands at $201.90 billion. This still keeps ETH firmly in second place among all cryptocurrencies, behind only Bitcoin. However, Ethereum's market cap has slid from highs above $500 billion last year, showcasing the broad-based pullback across digital assets over the past several months.
Daily trading volumes have also declined compared to previous peaks. Ethereum saw $10.96 billion worth of trading activity over the past 24 hours. While still robust, this comes well off from record volumes above $70 billion per day last year amidst heightened volatility and speculation. Lower volumes could suggest waning interest in ETH among shorter-term traders and speculators.
Drilling down into the price action, Ethereum had traded as high as $1,787 just two days ago before the latest sell-off took hold. The 5.87% single-day drop on August 18th takes ETH down near the psychologically important $1,700 level. This also puts Ethereum back near lows from June that have acted as technical support.
Notably, buyers did step in to bid up ETH off its intraday low around $1,650. This has happened frequently around these technical levels, though continued overall pressure makes it tough to gain upside traction.
Zooming out to the 1-week and 1-month timeframes shows the clearly defined downtrend in play. The multi-week slide has brought Ethereum well off its all-time high near $4,900 from last November. The 9.04% 7-day drop also brings ETH precariously close to the 10% threshold commonly viewed as entering bear market territory.
More positively, the 6-month return of -0.67% showcases how Ethereum had held up better for much of 2022 compared to Bitcoin and other top altcoins. The broader macro environment remains challenged, however, making it difficult for cryptocurrencies to mount a sustained rebound.
Why Ethereum Remains a Smart Buy at Current Levels
Despite Ethereum's steep price drop, there are several reasons why accumulating ETH around $1,700 could prove to be a savvy long-term move:
- Ethereum is the dominant platform for smart contracts and Web3 applications - The network effects and developer mindshare built up over the past several years gives Ethereum a commanding position in the world of decentralized apps and finance that should drive utility and value.
- Upcoming upgrades like "The Merge" will unlock new functionality - The switch to proof-of-stake and other improvements will make Ethereum more scalable, secure, and sustainable. This tech progress should boost adoption.
- Real-world adoption continues growing - From NFTs to DeFi, real users and capital are flowing into Ethereum's decentralized applications, illustrating that the ecosystem is maturing.
- Current prices could look cheap in hindsight - ETH hovering around $1,700 is still well below all-time highs and down significantly from 2021 peaks. Future growth could make these prices look like a bargain.
- Dollar cost averaging takes the emotions out - Building an ETH position over time allows investors to take advantage of short-term volatility while focusing on the long-term opportunity.
For these reasons, Ethereum likely remains one of the most promising blockchain projects for investors even after the latest pricing retreat.
Price Prediction Based on Current Technicals
Technically speaking, Ethereum looks to have found some temporary support around the $1,650-$1,700 zone after breaking down from its multi-month consolidation range. This lines up with the crucial June lows that could once again act as a floor.
However, until ETH can push back above resistance at $1,800, the path of least resistance likely remains to the downside. The bearish momentum of the past several weeks combined with negative sentiment across global financial markets makes upside a challenge.
A likely scenario could see ETH stagnate around current levels over the near-term. Further losses toward the major psychological $1,500 level would become highly likely if $1,650-$1,700 fails to hold up on a closing basis.
To turn sentiment and the technical picture around, Ethereum probably needs a catalyst like improving macroeconomic conditions or a renewed hype cycle around crypto and Web3. Without such a driver, traders may want to wait for lower levels to make long-term buys.
Is Ethereum's Decline a Buying Opportunity for Investors?
Ethereum's multi-week slide has undoubtedly been painful for long-term crypto believers. However, savvy investors know that massive price appreciations are often followed by equally steep declines. The key is taking advantage of these pullbacks to accumulate solid projects at discounted levels.
In that sense, Ethereum's roughly 60% decline from its peak could very well represent a unique long-term buying opportunity at current prices around $1,700. Consider that ETH rallied from under $100 as recently as 2020. The economic fundamentals and use cases around Ethereum are orders of magnitude stronger today even after the latest volatility.
Once the dust settles from this crypto winter, Ethereum could very well power to new highs over the long-term. That is why smart investors should ignore the noise and stick to a diligent dollar cost averaging strategy. These short-term gyrations are unlikely to matter much in the grand scheme of things.
What Price Levels Could Spark the Next Ethereum Breakout Rally?
Given the tremendous run-up and subsequent fall in crypto markets over the past few years, Ethereum is likely to remain highly volatile over the months ahead. Traders closely watching the charts will be focused on key technical levels that could spark the next major price trend.
Based on the current market structure, ETH would likely need to break out above resistance at $2,000 to get the bulls excited again in the near-term. Reclaiming this psychologically important threshold could signal a reversal to the ongoing downtrend.
If bearish momentum persists, traders will pay close attention to support around $1,500 which if broken could open the floodgates towards $1,000. On the flipside, a sharp bounce off $1,500 could indicate the bottom is in and restart the engine for another Ethereum rally.
With cryptocurrencies tightly correlated to macro factors like monetary policy and risk appetite, traders must watch these external drivers as well. An improving economy and stability in traditional markets would go a long way toward reviving enthusiasm and triggering the next Ethereum upcycle. Buckle up and get ready for the ride!