Ethereum went back and forth on Tuesday as we are trying to catch a breath after a major selloff. Crypto continues to plunge, but this candlestick does suggest we could get a short-term bounce. The short-term bounce could be an opportunity for people who are trapped at the moment to get out of the market. I would not be a buyer of this bounce, because crypto has much further to go to the downside.
If we break down below the bottom of the candlestick, then we just simply fall through the $1000 level. I do think that Ethereum will break down below there and go looking to an even lower level. At this point, I would not be surprised at all to see Ethereum drop to the $400 level again. The Ethereum market is especially vulnerable to all of the fraud that’s been going on because a lot of it is built on top of the Ethereum market. It’s not necessarily the fault of Ethereum, but it is most certainly the problem of Ethereum.
Monetary tightening continues to be a major issue, and central banks around the world doing that will continue to put a lot of pressure on crypto in general. Ethereum will probably do better than many other coins, but it still plays second fiddle to Bitcoin, which happens to look very negative as well. At this point, any rally will probably run into a lot of resistance near the $1750 level, which extends to the $2000 level, as well as the 50-day EMA. There’s nothing on this chart that suggests that you should be a buyer anytime soon, and crypto is about to enter a period of long-term malaise, so if you are a longer-term believer in crypto, you will get an opportunity to build up huge positions here relatively soon, but there’s no need to be in a rush.
As for trading crypto, the only thing you can do with crypto right now is short the market, because it’s going nowhere anytime soon. It will take the Federal Reserve and central banks around the world to change in their monetary policy before crypto even stands a chance. Beyond that, people will have to forget about the losses and the fraud that have all occurred recently.
