Ethereum has been on. A downward trend like the rest of the market, but the leading smart contract platform has been on the receiving end of one of the most brutal beatings. The digital asset that had managed to touch the $3,000 level last week had quickly lost its footing, which saw it spiral down once again. However, Ethereum did not establish any significant support, so it continued to fall.
With the recent drop, the digital asset had collapsed below significant support points. These include the 20 and 50 day simple moving averages, which are crucial in establishing support and subsequent lows for a cryptocurrency. For Ethereum, this has put significant selling pressure on investors, with sell-offs continuing to rock the digital asset.
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One thing to note is the lack of short-term support for Ethereum. For an asset to drop below its 50-day moving average shows reluctance on the part of investors to want to buy the digital asset, and without any buying pressure, the supply of ETH in the market continues to exceed demand, thus eliminating shortage. and leads to a decrease in value.
This puts ETH on a dangerous path to the next bear market. As the bears exert control over it, the lack of establishing any type of support means that Ethereum will not withstand any type of resistance, pushing it further down.
Why Ethereum May Revisit $2,500
The $2,500 is a feared price level for investors, especially those who are long in digital assets. This would officially put the cryptocurrency below half of its all-time high, marking a return to a downtrend. So far, Ethereum has managed to keep the bears at bay and secure its position above this price point, but with momentum dipping so low recently, it is more than likely that ETH will hit $2500 before there is any sort of remarkable recovery.
ETH price at $2,631 | Source: ETHUSD on TradingView.com
As noted above, ETH has dropped below the 50-day moving average. For any recovery or bullish rally, it is important that the asset starts trading above this point. If it doesn’t, you will see that ETH cannot form any significant support.
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With the lack of support, the next support level found at $2,522 will not be able to put up much of a fight, leaving the position vulnerable. ETH is currently trading above $2,600, but a break below this will see it retest this next support level.
The bears are expected to succeed in the first trial of this level. If so, ETH is likely to test $2,400 much sooner than investors would like. However, positions like this also present a buying opportunity, meaning investors could choose this point to start packing their bags. In that case, then ETH could be getting ready to retest its first resistance point above $2,600, which is $2,771.
Hodlin Featured Image, TradingView.com Chart
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