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Ultimately, one of the first clues will probably be found when Bitcoin starts to recover.
Ethereum drifted a little bit lower on Monday as traders came back to work. That being said, there are enough buyers in the $1150 level to cause a bit of noise, but it should also be noted that we are in a larger consolidation area. Whether or not Ethereum can turn around completely is a completely different question, but it certainly looks as if Ethereum is trying to at least stabilize itself.
Right now, it’s very difficult to get excited about crypto, because there is so much risk aversion out there and therefore it’s difficult to get overly bullish. The $1250 level has offered significant resistance a couple of times, and then the 50-day EMA which sits just above the $1400 level comes into the picture. At this point, I think it would be a little bit difficult to imagine a scenario where we shoot off to the upside without any type of larger catalyst.
If we break down below the bottom of the candlestick, then I think it’s okay to start looking for support near the $1000 level, and then eventually the $900 level. I think at this point it’s very unlikely that we can hang on to this area without some type of help. That being said, even if we do I think that we are essentially in the middle of “crypto winter”, meaning that you will have all kinds of time to start thinking about trying to build up a position. In fact, I may start to dip my toe in the water, but this is for a longer-term investment, not some type of trade.
The first sign of bullishness would be to break above the 50-day EMA, but then you would have to worry about the $1800 level, which is where we had broken down from previously. Break it above that would be obviously very bullish, but I think it would take a Herculean effort to make that happen. Quite frankly, we need to get through the merge at the very least to get things going. Beyond that, we also need to have the Federal Reserve change its overall attitude, as the tightening monetary policy has been all but death to anything close to being a risk asset. Ultimately, one of the first clues will probably be found when Bitcoin starts to recover.
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