- Ethereum is down 7.5% in the past 24 hours as Bitcoin has begun to fall from its weekend peak.
- The leading cryptocurrency is currently under $600 for the first time in many days.
- Analysts fear a further correction is possible as Ethereum’s Stochastic relative strength index (RSI) has formed a near-term peak.
Key Ethereum Indicator Reaches a Peak
Analysts believe that Ethereum could continue its descent in the weeks ahead. The chart below was shared by a leading trader on December 21st. It shows that Ethereum is on the verge of breaking below the technical support of $600-630 as a key indicator is reaching a peak.
The indicator in question is the Stochastic relative strength index (RSI), which is a popular indicator that tracks the strength of trends in a market. As Investopedia explains:
“The StochRSI oscillator was developed to take advantage of both momentum indicators in order to create a more sensitive indicator that is attuned to a specific security’s historical performance rather than a generalized analysis of price change.”
Ethereum could move lower in the weeks ahead, said the trader who shared the chart below. As he explained:
“Is bullish but…. I’m looking for a correction over the coming weeks and months (much depends on BTC of course and ETHBTC) Weekly Stoch RSI has been nailing tops on eth. ‘Its not the thinking that makes the money, it’s the sitting and waiting that makes the money.”
Each of the past two times Ethereum’s Stochastic RSI looked as it did now, strong corrections of dozens of percent were seen. Though, of note, Ethereum’s Stochastic RSI remained in “overbought” territory during periods in 2017’s bull run.
Chart of ETH's price action over the past three years with analysis by crypto trader TraderXO (@Trader_XO on Twitter). Source: ETHUSD from TradingView.com
All Eyes on Bitcoin
Analysts say that all eyes should be on Bitcoin, as a reversal in the leading cryptocurrency could cause a rally in ETH.
JPMorgan analysts said that while they noticed the recent bearish price action, institutional fund flows could sustain bullish price action. Bloomberg recently wrote on the analysts’ note on BTC and cryptocurrency:
“While it’s hard to avoid describing Bitcoin as “overbought,” the flows into the trust ‘are too big to allow any position unwinding by momentum traders to create sustained negative price dynamics’, the strategists said. A major slowdown in those flows would boost the risk of a Bitcoin correction akin to the one in the second half of 2019, they said.”
For the time being, institutional capital continues to flood into Bitcoin.
Featured Image from Shutterstock Price tags: xbtusd, btcusd, btcusdt Charts from TradingView.com Macro Analysis Predicts Bitcoin Has Begun Rally Toward $100k