Ethereum price crashed to a multi-week low of $1,885 as the cryptocurrencies sell-off accelerated. Ether then bounced back and is trading at $2,660, which is 40% above the lowest level yesterday. The coin has a market capitalization of more than $307 billion and is still the second-biggest digital currency in the world.
What happened: Like all digital currencies, the price of Ethereum crashed yesterday. In total, it fell more than 57% from its highest level this year. Still, investors are optimistic that the currency will bounce back. First, Ethereum is still the biggest platform for building decentralized applications. This trend will continue despite the crash.
Second, analysts believe that many investors will see the recent sell-off as a good entry point since it is simply a discount. In most cases, many investors tend to buy assets when the fear and greed index is in the extreme fear zone.
Third, analysts believe that the reasons for the sell-off will soon abate. For example, while the Fed will likely start tightening, there is a possibility that cryptocurrency prices will keep rising as a new normal is established.
Finally, as I noted in a Bitcoin price forecast elsewhere, large institutional holders of the coins are not selling. In a statement, Elon Musk reaffirmed his commitment that Tesla will keep holding its BTC holdings. Similarly, MicroStrategy has also committed to buying more Bitcoins. This is notable since Bitcoin tends to have a correlation with Ethereum.
Regular readers know that I have been bullish on Ethereum prices for a while. A few weeks ago, I noted that the currency would likely surge to $5,000. Obviously, this prediction has been challenged lately by the recent sell-off.
However, looking at the daily chart, we see that ETH has generally been in a strong bullish trend. It remains above the 200-day exponential moving averages. This is usually an important level that is watched by most analysts.
Also, the chart shows that Ether has had some parabolic moves in the past. In September, it dropped by 35% and in January, it fell by more than 30%. It also fell by more than 30% in February. Therefore, in my view, the bullish trend will remain so long as the price remains above the 200-day EMA.
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