In the short term, it seems very unlikely that Ethereum will give you the possibility of big gains.
Ethereum fell again on Tuesday as we continue to see a lot of negativity in crypto markets. Ethereum sees the $1250 level as resistance, and it’s not a huge surprise to see that we are not able to retest that area. The $900 level underneath could be the target, and if we were to break down below there, I think we’ve got a situation where Ethereum will fall much further. Breaking below that level is my base case scenario, but when we get there is a completely open question.
If we would do break down below the $900 level, it’s likely that the market could go down to the $500 level, which is an area where we had seen a little bit of back and forth previously. Because of this, that is my target, and I will be waiting until we get down there in order to start buying. The $500 level begins a massive support level down to the $400 level and would represent a complete “round-trip” of the entire bullish move. I don’t think that this is a market that looks healthy, nor do I believe that the cryptocurrency markets will turn around due to the fact that the Federal Reserve continues to tighten monetary policy.
With a tight monetary policy, risk assets such as cryptocurrency will continue to suffer at the hands of money running away from risk. Risk aversion is like cancer that ripped through the markets, going from one market to the next. Cryptocurrency is far out in the risk spectrum, so I think Ethereum continues to suffer due to this phenomenon. Furthermore, the rollout of “Ethereum 2.0” continues to drag its feet, which is not exactly a positive sign for the market. Don’t get me wrong, I do believe that eventually the entire upgrade will continue and improve the market, but we are not in the right circumstances to see cryptocurrency take off to the upside.
There will come a time when crypto starts to strengthen again, and when it does there will be profits to be made. Ultimately, this is a situation where you may have the possibility of huge windfall profits over the longer term, but in the short term, it seems very unlikely that Ethereum will give you the possibility of big gains.