In the near term, the pair may rebound as many investors rush to buy the dip.
Set a buy stop at 1,800 and set a take-profit at 2,025.
Add a stop loss at 1,600.
Timeline: 2-3 days.
Set a sell stop at 1,400 and a take-profit at 1,200.
Add a stop-loss at 1,600.
The ETH/USD price dropped sharply today, accelerating the cryptocurrency sell-off that started yesterday. Ethereum price has dropped by more than 23% from its all-time high of $2060 to the current $1,560.
Crypto Sell-Off Accelerates
Most cryptocurrencies have sold-off in the past two days as investors take profit and as risks of high-interest rates rise. The price of Bitcoin has fallen from an all-time high of $58,335 to the current $48,788 while Litecoin has dropped from $247 to the current $177. In total, the market cap of digital currencies has fallen from more than $1.6 trillion to $1.4 trillion.
The sell-off started when most digital currencies like BTC and ETH reached an all-time high during the weekend. It accelerated yesterday when Elon Musk said that the price of Bitcoin seemed expensive. As the richest man in the world, many crypto traders and investors tend to listen to him.
Further, as the price started to decline, the fear of more declines pushed more traders to exit, in what is known as panic selling.
The ETH/USD is also falling because of the performance of the Decentralized Finance (DeFi) industry. In the past few hours, the total value locked has dropped from more than $41 billion to the current $36 billion.
Some of the leading DeFi projects like Maker, Aave, Uniswap and SushiSwap have seen outflows of more than 10%. This is notable for Ethereum since these projects are built using its network.
Additionally, ETH/USD price has dropped because of the ongoing fears of high interest rates. Analysts believe that the upcoming $1.9 trillion stimulus will lead to a higher rate of inflation, which will lead to higher interest rates. Such rates will be negative for assets like crypto that tend to be highly speculative.
ETH/USD Technical Outlook
The four-hour chart shows that the ETH/USD price has fallen sharply in the past two days. A closer look reveals that this price action was easy to predict. For one, the pair was forming a rising wedge pattern that is shown in green. Today, the pair has also moved below the 25-period and 15-period weighted moving averages. In the near term, the pair may rebound as many investors rush to buy the dip.