Risk of Further Drop Is Not Yet Over
The past two weeks have been a difficult period for the cryptocurrency market, with most major cryptocurrencies facing significant losses due to hawkish central bank signals, regulatory scrutiny, and the recent news surrounding Silvergate Bank.
Silvergate Bank revealed last week that it would be voluntarily liquidating, which, according to Edward Moya, an analyst at OANDA, presents a “negative development” that could trigger further risks for the sector.
Silvergate was a major banking partner for numerous prominent crypto companies, and it’s worth noting that Bitstamp, Coinbase, Crypto.com, Paxos, Circle, and Galaxy Digital have publicly cut ties with the bank, assuring that customer funds remain secure.
This led cryptocurrency investors to withdraw their assets from exchanges, and the prevailing sentiment seems to suggest that the price of Ethereum could continue to fall further before finding its bottom in the current bear market.
Additionally, the U.S. Securities and Exchange Commission (SEC) is intensifying its efforts to apply securities regulations to crypto businesses, potentially classifying Ethereum as a security. The uncertainty surrounding Ether’s regulatory status is diminishing investor confidence.
While the chair of the U.S. Commodity Futures Trading Commission maintains that Ethereum is a commodity, New York Attorney General Letitia James disagrees, asserting that Ethereum, like LUNA and UST, relies on third-party efforts to generate profit for its holders, which classifies it as a security.
The U.S. Federal Reserve Is Likely to Persist with Its Aggressive Monetary Policy
Another bearish factor is the likelihood that the Federal Reserve will continue with its aggressive monetary stance, which could further dampen sentiment in the cryptocurrency market. Recent data showed the U.S. economy added 311,000 jobs in February, well above the expected 223,000, and there are projections that the central bank may raise interest rates by 50 basis points in March.
For crypto investors, this signals the paradox of “bad good news,” where strong economic data could fuel expectations of more interest rate hikes, potentially hurting the market.
The U.S. economy is also facing the risk of a recession, which could worsen market conditions for both stocks and cryptocurrencies, leaving investors uncertain about how long the Federal Reserve will maintain restrictive policies to control inflation.
In this environment, ETH may struggle to maintain its current price levels. Bridgewater Associates’ Ray Dalio predicts a challenging economic environment for the next five years, and he suggests this trend could also affect the cryptocurrency sector.
Ethereum (ETH) tehnička analiza
Ethereum (ETH) has fallen from $1,677.63 to $1,370.00 since early March, and its current price stands at $1,529.81. It may face challenges maintaining a price above the $1,400.00 mark in the near future, and a drop below this threshold would suggest a potential decline toward the $1,300.00 level.
Key Support and Resistance Levels for Ethereum (ETH)
Looking at the chart from June 2022, key support and resistance levels are marked, helping traders gauge potential price movements. Ethereum has dropped from its recent highs above $1,670.00, but if the price moves past the resistance at $1,800.00, the next target could be the key $2,000.00 level.
The immediate support level is $1,400.00, and if this level is broken, it would signal a potential decline to $1,200.00. Should the price fall below $1,200.00, a critical support level, the next potential target could be around $1,000.00.
Factors That Could Drive Ethereum’s Price Up
While Ethereum’s upside potential remains limited for March 2023, if the price breaks through the $1,800.00 resistance, the next resistance target could be at $2,000.00. Furthermore, any news suggesting the Federal Reserve is becoming less aggressive could be seen as positive for cryptocurrencies, which might cause Ethereum’s price to rise if the Fed opts for a smaller rate increase than expected during its March 21 meeting.
Indicators of Potential Downward Movement for Ethereum (ETH)
Sentiment in the cryptocurrency market remains largely negative, worsened by the news that Silvergate Bank is shutting down operations. Additionally, recent economic data from the U.S. points to the likelihood of further restrictive policies by the Federal Reserve, which could push Ethereum’s price below current levels.
Ethereum’s price is currently above the support level of $1,400.00, but a breakdown below this threshold could lead to a test of the next support level at $1,200.00.
Stručna mišljenja i analize
The fundamentals of Ethereum are closely linked to the overall cryptocurrency market, making it vulnerable to further declines. Many analysts predict that Ethereum’s price may fall even lower before the current bear market concludes. The ongoing debate about whether Ether should be considered a security token continues to undermine investor confidence.
Zhou Wei, former CFO of Binance and CEO of Coins.ph, believes the crypto market will remain depressed for a prolonged period due to increasing regulatory pressure.
Odricanje od odgovornosti: Cryptocurrency is highly volatile and not suitable for all investors. Never invest more than you can afford to lose. The information provided is for educational purposes and should not be considered as investment or financial advice.
