Ethereum's native token Ether (ETH) slumped on June 16, suggesting that its relief rally, coinciding with the Federal Reserve announcing it will hike the benchmark rate by 0.75%, is at risk.
Ether's price slipped by 9.2% to around $1,120 per token a day after it rebounded by 23% after dropping to almost $1,000, its worst level since January 2021.
The ETH/USD pair's upside move, followed by a sharp correction, appeared in tandem with U.S. stocks, confirming that it traded like a risk-asset.
The decline means that Ether has shed 77% of its value since November 2021 and is now trading below its "realized price" of $1,740, data from Glassnode shows.
In addition, a higher interest rate environment adds more selling pressure, with investors leaving high-risk trades and seeking safety in traditional hedging assets, such as cash.
Investors' faith in cryptocurrencies has also eroded following the collapse of Terra (originally LUNA, now LUNC), a $40 billion algorithmic stablecoin project, and lending platform Celsius Network's decision to halt withdrawals.
Atop that, Three Arrow Capital, a crypto hedge fund that oversaw nearly $10 billion in May 2022, reportedly faces insolvency risks. Fears about systemic risks have further limited the crypto market's recovery bias, hurting Ether.
ALERT: 3AC $250 Million $ETH Position Will Be Liquidated at ≈1000
— Market Meditations (@MrktMeditations) June 15, 2022
From a technical perspective, Ether's recent gains look like a bear market rally, which could be due to investors covering their short trades.
In detail, investors close their short positions by buying the underlying asset back on the market—typically at a price less than the one at the time of borrowing—and returning them to the lender. That prompts the asset to rally between large downside moves, but it does not signify a bullish reversal.
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These minor rallies could be a bull trap for investors that mistakenly see the rebound as a sign of bottoming out.
On the other hand, experienced bears utilize the pump to open new short positions at the local price top, knowing that nothing has fundamentally changed about the market.
Ether's "bear pennant" on shorter-timeframe charts also supports a bull trap scenario.
Bear pennants are bearish continuation patterns that form as the price consolidates inside a triangle-shaped structure after a strong downside move.
As a rule of technical analysis, traders measure a bear pennant's profit target by subtracting the breakdow point from the height of the previous decline (called "flagpole"), as shown below.
This puts the next bear target for ETH price at $850, down almost 25% from June 16's price.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
1.38M addresses bought 1.33M ETH at $2,984 ($3.9B total). Recent dip causes losses. Potential selling pressure near break-even. Whales move ETH, signaling market shifts. Current price around $3,000, support at $2,984. Bearish if support breaks, bullish above $3,000.
Huang BoBloFin’s Griffin Ardern said that options traders may purchase ETH in the spot/futures market to hedge short positions in call options, thus adding to the bullish momentum.
JinseFinanceThe Ethereum ($ETH) market witnessed notable whale accumulation, with over $1 billion added in holdings despite recent price stagnation. Ethereum trades at $2,300, reflecting a 78.5% surge in 12 months, while Bitcoin soared by 170%. Institutional inflows in crypto investment products reached $2.2 billion in a year, with Bitcoin-centric products leading at $1.93 billion. Solana ($SOL) attracted attention, gaining $167 million in investments post FTX's collapse, surpassing Ethereum's inflows. Analysts maintain bullish sentiments, predicting ETH to hit $10,000 and foreseeing potential price surges post Bitcoin ETF approval.
Xu Lin各种以太币价格指标的汇合表明，Ether可能正在向3000美元的目标价格迈进。
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