The price of Ethereum (ETH / USD) was able to make up some of its earlier losses on Tuesday morning as contagion fears subsided. The coin rose to $ 3,000, above Monday’s low of $ 2,802. With a market capitalization of more than $ 355 billion, it is the second largest cryptocurrency in the world.
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Ethereum and other cryptocurrency prices plummeted on Monday as the fear and greed index fell sharply. The coin fell to $ 2,802, which was about 30% below its high this week.
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There were several reasons for the sharp drop in the coin. First, there are concerns that American regulators were starting to shift their focus to stablecoins. Regulators, including the US Federal Reserve and the Treasury Department, fear that stablecoins like Tether and Binance USD will lead to more volatility in the financial market.
A stronger focus on stablecoins could have a big impact on the blockchain industry. Plus, stablecoins are widely used in most cryptocurrency transactions and are currently valued at more than $ 120 billion.
Second, the drop in Ethereum price coincided with the sharp rise in volatility in the financial market. In fact, the CBOE volatility index rose more than 20% on Monday while the fear and greed index fell to its lowest level in months.
The sharp rise in volatility was mainly due to the increasing risk of contagion from the collapse of Evergrande, the second largest real estate developer in China. Investors believe the collapse will have global repercussions.
As a result, the decline in ether coincided with the sharp collapse in stock markets, with the Dow Jones, Nasdaq 100 and S&P 500 indices falling more than 2%.
Meanwhile, the performance of Decentralized Finance (DeFi) also contributed to the Ethereum sell-off. Most DeFi platforms’ Total Value Locked (TVL) fell sharply as investors remain concerned about the industry.
Ethereum price prediction
The daily chart shows that ETH price has formed a cup-and-handle pattern. In most cases this pattern is an upward signal. It is currently in the “Handle” zone. The price has also moved below the 25-day moving average and is stuck at the 100-day EMA.
At the same time, the Relative Strength Index (RSI) is on a downward trend. Hence, the coin is likely to rebound as the bulls target the monthly high of more than $ 4,000.
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