Ethereum continued to trade in a tight consolidation Tuesday, with increasing manifestations of weakness. Last Thursday, the second-largest cryptocurrency by market capitalization witnessed a flash crash that dropped its price by about 14% to $1,550 in under 24 hours.
The decline, primarily triggered by Bitcoin, occurred amidst speculation that SpaceX, helmed by Elon Musk, might have liquidated its entire BTC portfolio. This speculation arose following reports that SpaceX had marked down the value of its Bitcoin holdings by $373 million the previous year. Furthermore, the market sentiment was dampened by news that the SEC had postponed its decision on Bitcoin ETF approvals until 2024.
Meanwhile, following Ether’s unexpected drop, market participants have been trying to speculate about the future of its price, with some predicting the worst is yet to come. On Sunday, prominent cryptocurrency analyst Ali Martinez raised apprehensions regarding Ethereum’s future direction. Through a tweet, Martinez shed light on Ethereum’s fundamental network aspects, which he claimed exhibited bearish tendencies.
“Ethereum network fundamentals are still lagging, signaling a bearish trend!”, he said.
Notably, he singled out a crucial metric—the monthly average of active Ethereum addresses. Martinez’s observation unveiled that this metric fell short of its yearly counterpart, indicating a marked absence of on-chain activity. In Martinez’s analysis, this occurrence bore the classic traits of signalling a frail network state and limited utilization.
In a subsequent tweet today, the pundit pinpointed a specific price range that he believed could trigger a significant downturn for Ethereum. According to him, “Ethereum slipping beneath the $1,600 – $1,550 bracket for $ETH might set the stage for a significant 37% – 45% correction, targeting $1,000.”
This projection implied that Ethereum might experience a considerable decline in value, possibly reaching levels last seen in October 2022.
However, it’s worth noting that Ethereum’s technical indicators remain solid, as evidenced by its ability to establish higher highs on the daily timeframe consistently. According to an X user and crypto chartist called Haituando, price is likely to bounce off of the support trendline (black), bouncing back higher.
“Technical indicators suggest a bullish trend on the horizon. With key resistance levels broken and a series of higher lows, ETH appears poised for an upward trajectory. Keep an eye on developments like EIP-1559 and ETH 2.0 as potential catalysts,” he tweeted.
Ether traded at $1,587 at press time after a 2.17% increase in the past 24 hours. On the other hand, its rival, Bitcoin, traded at $25,948, up 3.41% over the same period.