The cryptocurrency sector has been in turmoil since Nov. 10 when Ethereum and Bitcoin (CRYPTO: BTC) hit all-time highs of $4,867.81 and $69,000, respectively, and bullish traders have been unable to catch additional upside other than a few quick relief bounces.
On Jan. 6, JPMorgan analysts, led by Nikolaos Panigirtzoglou, said Ethereum is losing ground in the non-fungible token (NFT) space to competitors such as Solana (CRYPTO: SOL) due to Ethereum’s high transaction fees. The crypto’s NFT volume has declined from about 95% at the start of 2021 to around 80%, the firm said in a note.
Panigirtzoglou also said Ethereum’s current 70% DeFi market share could drop further if the crypto is unable to scale by 2023.
Ethereum developer Tim Beiko responded to JPMorgan’s note, calling it a “lazy/very high level critique.”
The Ethereum Chart: When Ethereum broke down from the bear flag pattern, the crypto also negated an uptrend it had developed while completing the flag formation. The measured move of the bear flag comes in at about 22%, which indicates Ethereum could fall toward the $2,655 level, although if the crypto does drop that far there are likely to be continued intermittent relief bounces.
On Tuesday, Ethereum was looking to print a bearish Marubozu candlestick on the daily chart, which indicates the crypto could slide further on Wednesday. Another move to the downside, however, will push Ethereum’s relative strength index back down toward the 30% level, which could indicate a bounce will soon follow.
The move lower was created on high volume, which indicates the bears are fully in control. By late afternoon, Ethereum’s volume was about even with its 100-day average volume, with still a few hours to go before the 24-hour trading session ends.
Ethereum is trading below the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending below the 21-day, both of which are bearish indicators. The crytpo is also trading well below the 50-day simple moving average, which indicates longer-term sentiment is bearish.
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- Bulls want to see the crypto begin to trade sideways on decreasing volume to indicate Ethereum is running out of sellers, and then for big bullish volume to come in and push the crypto back up above the eight-day EMA. Ethereum has resistance above at $3,240.01 and $3,415.52.
- Bears want to see sustained big bullish volume come in and drop Ethereum down below a support level at $3,057.82. Below the area there is psychological resistance at $3,000 and if the crypto were to lose that area as support it could fall toward $2,890.
Photo: Courtesy of Ivan Radic on Flickr