Ethereum price gets back to $3K as institutional investors pile into ETH futures

Ethereum price gets back to $3K as institutional investors pile into ETH futures

Ethereum’s native token Ether (ETH) staged a rebound on Sept. 26 following a massive decline earlier this week that saw its prices plunging to as low as $2,651 on Coinbase.

The ETH/USD exchange rate rose 3.63% to hit an intraday high of $3,030. The upside move amounted to a 14.3% upside retracement from the pair’s week-to-date low at $2,651, showing that traders attempted to retain their bullish bias despite potential headwinds ahead.

Last week, Ether prices fell due to a flurry of issues arising from China. On Monday, traders dumped crypto assets en masse after a tumult in China’s heavily indebted property market prompted a selloff across global stock markets.

A rebound move ensued later in the week but met with another selloff on Friday after People’s Bank of China reiterated that crypto transactions are illegal. Nonetheless, Ethereum bulls maintained their foothold and pushed prices back above $3,000, a psychological resistance level.

ETH/USD daily price chart. Source: TradingView.com

The sentiments were similar across some top crypto assets, with the benchmark cryptocurrency Bitcoin hitting an intraday high of $43,767 on Coinbase following a 2.49% upside move. Meanwhile, Uniswap exchange’s native asset UNI also fared higher by more than 19%, becoming the top-performing crypto asset at least in the previous 24 hours.

At the same time, Ethereum’s top rivals Cardano (ADA) and Solana (SOL) performed poorly, with ADA/USD dropping more than 5% and SOL/USD losing over 3% on a 24-hour adjusted timeframe.

Institutional demand

Ethereum gains also followed a bullish report thifrom JPMorgan & Chase. The study noted that institutional investors have started increasing their exposure in Ethereum markets.

Analysts at JPMorgan credited the ongoing craze in the decentralized finance (DeFi) and nonfungible token (NFT) sector as the primary driver behind investors' interest in Ethereum. They added that the 21-day average Ethereum Futures premium climbed to 1% over spot ETH prices, citing the Chicago Mercantile Exchange (CME) data recorded since August.

Ethereum Futures daily price chart. Source: TradingView.com

The JPMorgan report coincided with a record amount of Ether tokens getting withdrawn out of all crypto exchanges, as per data provided by CryptoQuant. At press time, the net ETH reserves on trading platforms had dropped to 18.44 million ETH compared to 23.94 million ETH a year ago.

Related: Ethereum drops more than Bitcoin as China escalates crypto ban, ETH/BTC at 3-week low

Independent analyst PostyXBT also anticipates a potential further price rebound in Ethereum markets, noting that the cryptocurrency’s latest declines had pushed it inside a classic accumulation range, as shown in the chart below.

ETH/USD weekly price chart featuring its latest accumulation range. Source: PostXBT, TradingView.com

“Weekly close equally as important for ETH today as price tests the previous range highs as support,” the analyst noted.

“Seems like a logical area to make a higher low and I have bought more here for long-term bags/swing trade. RR looks favorable after a 33% correction from the local top.”

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Ethereum: We got the “Pullback, Rally, Significant Pullback.” Expect a Rally Soon

It has been a month since I last provided my Elliott Wave Principle (EWP) based insights into Ethereum (ETH), so it is time to continue the story. Back then, see here and here, I was looking for a more minor degree 4th wave pullback to ideally $2865, then a 5th wave rally to complete a larger 1st wave top at ideally $3585, followed by a more significant 2nd wave pullback to ideally $2400-2600. See Figure 1 below.

What transpired? Ether had a complex (red) intermediate wave-iv to $2952 (August 18 low), an extended -subdividing- wave-v to complete (black) major wave-1 at $4026on September 3, and ETH dropped to as low as $2678 on Tuesday, September 21. Albeit the cryptocurrency did not adhere to the ideal/textbook path, the overall pattern forecasted over a month ago, and in fact, already drafted early August (see here), came to fruition.

IMHO there is no other and better method available than the EWP to know what path lies ahead, even almost two months in advance! Hence, my premium crypto trading members are always well-aware of the course that lies ahead, giving them a tremendous edge over those who do not. They are also aware that we are dealing with a probabilistic environment. All we can do is anticipate the ideal/textbook path, monitor the price action to see if it adheres, and then adjust as necessary. In this case, only a few adjustments were required. So what’s next for Ethereum?

Figure 1. ETH daily chart with EWP count and technical indicators.

The “pullback, rally, significant pullback” came and went. Wave-2 looks about complete

Corrections always are made up of at least three waves: an initiation move down (wave-a), a dead-cat bounce (wave-b), final leg lower (wave-c). In this case, see Figure 1, I can identify three (red) intermediate waves (a,b,c) since the $4026 high made September 3. Depending type of correction (zigzag vs. flat vs. triangle vs. complex), the c-wave is often about equal in length to the a-wave, measured from the bounce (b-wave) high.

Story continues

Here c=a targeted around $2800. ETH bottomed at $2678, which is well within reasonable margins of error. The recent two-day rally can still be a smaller degree 4th wave of this c-wave: green minor-4, but it is unnecessary. If it is, ETH will fall below $2678 one last time, target the 62.8% retrace of wave-1 at $2575 and then reverse higher.

Remember, back in August, I forecasted, “…a multi-week correction, wave-2, should unfold. It can target anywhere between $2145-2865 depending on how deep or shallow this wave-2 will become. It is impossible to know beforehand. However, typically 2nd waves retrace about 50-62% of the entire prior 1st wave, so I anticipate for now -without having any data at hand yet to confirm a bottom in the $2380-2590 zone (orange rectangle). Once more price data becomes available, I can fine-tune this pending and anticipated low.”

Bottom line: In an uncertain world, one can not expect me to foresee every move and every tick weeks beforehand. But with the EWP, I was able to have an excellent idea of what was ahead for ETH weeks in advance and to a degree of accuracy, no other method IMHO can. Thus, my wave-1,2 forecast has been of the “so far so good” type, if I may say so myself. If $2678 was all she wrote, I consider that forecast complete and will start to look for the setup towards $9000. If $2678 does not hold, expect a trip to $2575. Ethereum will have to drop below that level to suggest a trip back down to the recent summer lows that can still be in the cards.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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For Now, Ethereum Should Remain Shielded From the Evergrande News

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The cryptocurrency world has been all over the place lately. It looked like it was going to roll over in late July, but Bitcoin (CCC:BTC-USD), Ethereum (CCC:ETH-USD) and others found some momentum and ran with it.

Source: Shutterstock

For Ethereum, that meant a 130% rally from the lows, as the cryptocurrency crossed the $4,000 barrier earlier this month. An abrupt pullback was met by buyers, but then the Evergrande (OTCMKTS:EGRNF) news out of China sank cryptocurrencies.

Is the group really that exposed to Evergrande?

Evergrande and Cryptos

The stock market had been struggling through a tough couple of weeks coming into Sept. 20. After several low-volume trading weeks where the markets ground along (spending too much time going absolutely nowhere), stocks began to sputter. But they were only down slightly coming into the 20th. Then worries over the Evergrande Group sprang up, sending index futures lower on Sunday night and then plummeting on Monday the 20th.

Why does this matter? Because cryptocurrencies took the same path, Ethereum included. Although like usual, the group did so with far more volatility. From its high on Sunday to its low on Monday, Ethereum fell 20%. It has since recovered somewhat but remains below the $3,000 threshold.

While Evergrande Group does not actually have a direct impact on cryptocurrencies (or U.S. stocks for that matter), there are concerns about broader implications. Specifically, it creates concerns over the Chinese economy and China’s real estate market.

Although some are calling this China’s “Lehman moment,” my hope is that it’s far more isolated than that. By making it into a Lehman moment, that creates systemic risk. When we’re dealing with that, it doesn’t matter that Microsoft (NASDAQ:MSFT) or the S&P 500 aren’t directly affected — or in this case, Ethereum.

What it creates is panic and “risk-off” trades, and that does affect these assets.

I think the Evergrande Group news was more of an excuse for the market to do what it wanted all along, which was to go through a mild selloff. Unless this creates a compounded systemic issue in China, U.S. equities and cryptocurrencies shouldn’t face too large of an effect from this situation.

Trading Ethereum

Source: Chart courtesy of TrendSpider

The situation with Ethereum is a bit trickier. While the S&P 500 fell a couple of percent, Ethereum tumbled into a technical bear market.

On Monday’s dip, Ethereum tested into and held the $2,900 to $3,000 area. It also held the daily volume-weighted average price (VWAP) measure. A day later and it closed below all of these levels — plus the 21-week moving average.

Ethereum is trying to reclaim this area now, but it’s sitting below the VWAP measure and hanging around $2,950. Back above $3,000 and this one will look better. Still though, concerns linger.

So far we’ve got an “ABC” correction down toward (but not to) the 200-day moving average. At this week’s low, Ethereum was down well over 30% from the highs.

From here, see how it handles the VWAP measure on the upside and the 21-week moving average on the downside. A move above the VWAP and $3,000 level opens the door to the 50-day moving average and $3,350 area. Above that and the Sept. 16 high near $3,665 is in play.

The risk with a rally is that Ethereum sets up for an “ABCDE” correction, which could land the cryptocurrency below $2,500. I know investors don’t like this type of arbitrary view, essentially saying Ethereum could do “this or that.” I’m sorry, but that’s how asset prices work. All we can do is follow along as best as we can.

On the flip side, a move below the 21-week moving average puts this week’s low and the 200-day moving average in play. Below that and $2,500 or lower could be on deck.

The Bottom Line

I realize I’m not talking about Ethereum as a raging bull in this article. But that’s because short-term price gyrations can occur regardless of the fundamentals or long-term bullish thesis.

Did the selloff in many stocks make sense in March 2020? Clearly not, and the same could be said for Ethereum now. Even if we see $1,750 to $2,000 again, that doesn’t change any of Ethereum’s long-term potential.

For now I will remain a long-term bull, but in the short term, Ethereum remains a “prove-it” asset. Back above $3,000 and this one can rally. Below the 21-week moving average and I’ll be watching for a deeper dip.

On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.

The post For Now, Ethereum Should Remain Shielded From the Evergrande News appeared first on InvestorPlace.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.