Ethereum had a great performance last week as prices shot up by 50%. However, prices are on the decline in the past 24 hours. Many investors started to panic because most of them just entered the market. Placing buy entries solely because of hype without analyzing the market is always a bad idea. That’s why in this article, we’re going to analyze why is Ethereum down and what will make Ethereum crash to $1,000 again.
What is Ethereum Blockchain?
The creatior of Ethereum is Vitalik Buterin. Ethereum is the unofficial runner-up to Bitcoin. This blockchain, which was introduced in 2013, allows smart contracts, earning ETH the nickname of “Programmable money.” On the platform, anyone with a computer may start their own smart contract, creating a very dynamic and creative atmosphere. Due to its leadership in the thriving DeFi ecosystem, which is built on the network’s smart contracts, Ethereum has recently garnered a lot of attention.
Lately, most NFT and Metaverse projects are all running on the Ethereum network. Because of this, Ethereum is set to boom in market value as more and more companies are onboarded to this new decentralized world. Additionally, once the roadmap of Ethereum is complete, we can expect that things run smoothly, unlike what’s currently happening.
Why is Ethereum Down again?
After the incredible performance of last week, one cannot but expect a hard adjustment lower. This comes at a time when the entire crypto market adjusts after an extended green week. This is mostly due to profit taking, which increases the selling pressure, and in turn, drives prices lower. For Ethereum specifically, we can see that in figure 1, its prices dropped from the resistance of $1,650 and reached the current price of around $1,480. This price represents a strong support as previously, prices managed to rebound higher (green circles).
Will Ethereum crash to $1,000 again? Maybe…
Ethereum prices did crash previously and even reached a low of $880. That’s why most investors are still scared of any potential price crash. If ETH price was to reach around $1,000 again, it would be because of 2 main factors:
- Fundamental factor: The upcoming Ethereum merge is set to happen sometime towards the end of August 2022. If for any reason this event got delayed, ETH prices are expected to take a hit and sink lower. Another fundamental case would be if the merge did actually happen but failed to run smoothly on the mainnet. This would in turn weaken investors’ confidence and send prices lower. Those things are highly likely to happen in the development world.
- Technical factor: An example of this would be a consolidating crypto market, or even worse, a bearish one. This means that the selling pressure is much stronger than the buying power, sending prices lower. If we look at figure 2 below, we can see that we are currently at a strong support price. If ETH price breaches this support, it would send prices lower towards the following price areas:
- First target: $1,400
- Second target: $1,200
- Third target: $1,000
