Ethereum saw its to-date best value i.e. US$ 4,040 in November only to witness a 20% decline in value in recent times. It has now moved into the price range of US$ 4,163 i.e. the present market value.
Today was quite the start for Ethereum which went into Saturday with the value of US$ 4,008. Then there were gains of US$ 70 which took the value @ US$ 4,078. But at the end of the day, Ethereum failed to keep upward momentum and closed the day with the value of US$4,040.
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Experts believe that above US$ 4,000 is the instrumental price threshold for Ethereum. However, selloff risks are increasing for Ethereum because of the indicators linked with fundamental and technical analysis.
First of all, Ethereum is seen overcoming the “bearish reversal” pattern, which is usually called a “rising wedge”. On the other hand, this ‘rising wedge’ is an event that occurs when an asset’s value moves upwards. While moving upwards, the value then goes either at or above the value which is pre-determined by mounting trendlines. Analysts believe that in case the ‘rising wedge’ starts going down then Ethereum’s value could drop below US$ 2,900. This would mean that Ethereum would go back to the price range which it had seen in the month of January 2021.
The second reason for Ethereum’s anticipated fall could be because of “bearish divergence”. A bearish signal is very much there in Ethereum although Ethereum has been smartly tackling selling pressures. How Bitcoin was tackling selling pressures, made people prefer Ethereum over Bitcoin as a ‘hedge’ against shrinkage of crypto-economy stemming from Bitcoin’s value decrease. For instance, the market capitalization of Bitcoin was reduced to almost 30% on 4th December 2021. However, Ethereum’s market cap dropped by only 17%.
However, even Ethereum’s perspective of being a ‘hedge’ is not enough. Divergence is evidently increasing in Ethereum which has initiated a contest between Ethereum’s momentum and its price.
Furthermore, there are enough signals which suggest that Ethereum value would be reduced further. The reason for the fall to occur is associated with the upcoming meeting of the Federal Reserve scheduled for 14th December 2021. In this meeting, Federal Reserve is planning to discuss the rising tide of inflation in the US. More inflation would mean more divergence and therefore plummeting of Ethereum’s value cannot be ignored. At present, however, the effect of inflation has been mitigated which is because of the stimulus package. Resultantly, there are no commendable value gains for Ethereum.
Analysts are however of the view that for the crypto economy, inflation has a positive side. They believe that the stimulus package would end at the expiry of 2022’s first quarter. When this will happen, inflation would prevail without any subsidizing effect and that time would be benefitting for Ethereum.