The price of Ethereum crashed today. It lost more than 12% at its intraday bottom. What to make out of this crash? Reasons to be concerned? InvestingHaven’s research team answered this question today to its premium crypto subscribers with this one sentence: “It always looks scary near any bottom.“
We share some deeper insights about the developments in the crypto market, specifically Ethereum, which should be considered a sneak preview of what InvestingHaven wrote to members of its premium blockchain & crypto investing service today.
First, the price of Ethereum suffered a flash crash today. It brought the 2nd largest, and much respected, cryptocurrency below this critical area of $400. This comes 2 weeks after we observed that Ethereum’s price is close to a breakout (new bull market in 2018). Yes, things tend to change very fast in the crypto market, primarily because we enter a decisive stage. Cryptocurrencies are near make-or-break levels, it’s decision time!
What now, what to make out of this?
One thing is clear: turning to the news about Ethereum’s price drop is really not going to help you in any way, it will only confuse you.
It’s a much better idea to turn (y)our attention to Ethereum’s price chart in order to make sense out of what’s happening. In the end the chart shows the end results of all decisions made in the market while news is mostly the end result of story telling.
The first chart is the daily price chart of Ethereum. Although the drop below $400 was important and significant it did not create damage at this point in time. Yes, it dropped deeper below critical support, but it recovered as well. In plain technical terms the wick at the bottom of today’s candle is a positive thing, as long as it holds.
This massive triangle pattern after the top of January 2018 is still intact. As long as Ethereum trades above $350, and does not drop for 5 consecutive days below this level, there is no structural harm done.
Interestingly, the weekly chart, which shows the longer term and dominant trend, reveals exactly the same $350 level as a crucial price point. However, there is another, more crucial price point, on the same chart: $250. Bulls do not want, under any circumstance, to see Ethereum’s price drop below $250.
Conclusion at the close of Wednesday August 8th:
For now, it is clear that the first crucial support level on Ethereum’s price chart ($350) attracted sufficient buying to avoid a breakdown. All in all, it really means that anxious crypto investors are going through the same feeling that millions of other investors have experienced over and over in the past: It feels scary near any bottom. Ethereum, and the crypto market in general today, did not feel any different. These are the perfect conditions to lose control over emotions which, as always, ends up to be disastrous.
Need some guidance in these tough times? Read InvestingHaven’s exclusive alert today sent to premium crypto subscribers >>