Here’s Why Ethereum’s Overnight Plunge May Help Clear a Path to $700
- Ethereum was struck hard by the plunge seen yesterday evening by the aggregated crypto market
- After setting fresh 2020 highs of $495 alongside BTC’s push towards $19,000, the cryptocurrency saw a rapid and unrelenting plunge that sent it to lows of $450 on some trading platforms
- This 10% decline occurred over the course of a few minutes and sent shockwaves throughout the entire market
- It has since recovered from these lows and is now consolidating above $470
- One trader is calling for a move up to $700 once ETH can break $490
- The path to set these new multi-year highs could have been cleared by last night’s decline
Ethereum was the first major digital asset to plunge last night, with Bitcoin following close in its footsteps.
The intensity of this decline was unrelenting and caused the cryptocurrency to shatter all the major support levels it had formed within the upper-$400 region.
This selloff had two major effects: liquidation of late long positions and trapping bears who expected further downside.
This could mean that it was a technically bullish drop, as it has cleared a path forward for the crypto to see a more sustainable push past $500.
Ethereum Liquidates Long Positions in Rapid Overnight Selloff
At the time of writing, Ethereum is trading down just over 1% at its current price of $476. This marks a decline from highs of nearly $500 but a notable surge from lows of $450 set just a handful of hours ago.
Whether or not bulls can support the crypto above $470 and continue treating this as a strong base of support will likely determine where it trends in the near-term.
ETH Could Soon Make a Bid at $700 – Claims Analyst
He notes that it needs to reclaim $490 for this to be a realistic possibility, but he calls dips like the one seen last night a “god gift.”
“Above $490 i see a clear path to 700s. A drop to $430 is a god gift.”
Image Courtesy of Wolf. Source: ETHUSD on TradingView.
Because dips and rebounds – often called “Darth Maul” candles – clear late and overleveraged positions, it could provide a clearer path for Ethereum to push higher in the coming few days.
Some of its price action will undoubtedly depend on Bitcoin, with BTC breaking its all-time highs potentially creating a mass capital rotation event into altcoins.
Featured image from Unsplash. Charts from TradingView.