Ethereum May Rally To $3k If Bulls Hold On To Long Position
The price of Ethereum (ETH) was in bad health on Tuesday, falling almost 6% to the south and breaking below $2,800. Bulls, on the other hand, were waiting to jump in and buy ETH at a steep discount. The price of Ethereum is up 2.5% in early trading and appears to be heading back to $3,018.55, recouping Tuesday’s losses.
Ethereum May Recover
The price of Ethereum was stung by dismal earnings from Alphabet, Wall Street’s favorite tech stock, with Youtube losing market share to Tik Tok. Investors quickly rebalanced and reevaluated the situation, eventually shrugging off the news this morning because earnings are still strong, and no substantial reports on future losses were released.
As a result of the spillover fall from Alphabet’s disappointment, the price of Ethereum is ripe for the taking, trading in the ASIA PAC open at a juicy discount just below $2,800.00. Bulls swiftly snatched up pieces of the price action and are poised to recoup all of Tuesday’s losses, putting the price back to $3,018.55. From there, it’s only a short distance to $3,163.35. If earnings reflect excellent news in the coming days, predict a buy-side explosion to $3,391.52, resulting in a 20 percent profit.
ETH/USD trades close to $3k. Source: TradingView
With Facebook’s numbers expected to be released this evening, a turnaround is possible. Expect a huge decline in the Nasdaq, which will drive cryptocurrencies to new lows, if Facebook surprises on the downside with lower user counts and less income from its publicity earnings. The price of ETH will decrease to $2,695.70 and then $2,574, representing a 10% loss.
Related Reading | Will The Ethereum Merge Skyrocket ETH?
Ethereum Merge Is A Concern
There are a few concerns to be aware of, one of which being the approaching ‘Merge,’ which will see Ethereum switch from a proof-of-work to a proof-of-stake paradigm, resulting in a 99.95 percent reduction in overall energy consumption. Mike McGlone of Bloomberg explained:
“The Merge, shifting Ethereum from a proof-of-work model to proof-of-stake, will convert Ether into an equity-like instrument with elegant supply/demand dynamics that could drive significant interest in the asset. Stakers of Ether (owners that validate) will be entitled to a share of future revenue (fees) generated on the network, with EIP-1559 dictating a portion of the fees (about 70%) should be burnt (akin to a buyback) and the rest distributed as a reward (dividend)”
But, as McGlone warned, there’s still a lot that may go wrong with the ‘Merge.’ Because of crypto’s present link to risk-on assets like tech stocks, which have been witnessing a major selloff in April, the price prognosis for the immediate term seems bleak. As a result, McGlone does not rule out Ethereum falling to $1,700, its low from last summer.
If the stock market declines further and lowers the tide for risk assets, Ethereum could repeat last summer’s performance and revisit about $1,700. Once the weaker, leveraged long positions were purged, Ethereum hit a new high around $4,800 in November. Ethereum faces headwinds along with most risk assets as the Federal Reserve fights the highest inflation in 40 years. We see the potential for stock-market reversion as a primary headwind for Ethereum.”
Related Reading | TA: Ethereum Revisits $2.8K, Why Upsides Might Be Limited
Featured image from Shutterstock, chart from TradingView.com