- Ethereum, like Bitcoin, has faced a strong correction over the past few weeks.
- From last week’s highs around $490, the cryptocurrency has dropped around 30%.
- As of this article’s writing, the coin trades for $335, marginally above the local lows.
- Ethereum could face a deeper correction if it doesn’t manage to retake a pivotal price level.
- The cryptocurrency’s descent may be compounded by a Ponzi scheme/pyramid scheme ravaging users in Asia.
- The scam purportedly has garnered hundreds of millions of dollars worth of Ethereum over recent months.
- That crypto hitting the market would likely force prices of ETH and other cryptocurrencies much lower.
Ethereum Is on the Verge of Extending Even Lower: Analyst
Ethereum is on the verge of dropping back towards its local lows if it fails to retake a pivotal support level, an analyst argues.
He shared the chart below on September 7th, noting that Ethereum is currently trading below a pivotal resistance level at $340. $340 has held as both support and resistance over the past few days as ETH has undergone a strong drop.
According to the trader, if Ethereum doesn’t “power above” and hold above $340, a drop lower is likely:
“Unless $ETH powers above this level it’s nothing but another scam bounce before lower. Not touching anything until the lows are gone or ETH show strength LTF. This drive does have the highest bullish momentum we’ve seen all day.”
Chart of ETH's price action over the past few days with analysis by crypto trader Cold Blooded Shiller (@ColdBloodshill on Twitter). Chart from TradingView.com
This bearish short-term outlook comes as Ethereum’s long-term fundamentals have seemingly become stronger than ever.
Ryan Watkins, a researcher at Messari, noted that his analysis of Ethereum’s fee market indicates that the asset is “probably undervalued” as a capital asset, even though it’s much more than that:
“At this point ETH is probably undervalued even just considering it purely as a capital asset. Annualizing Ethereum’s last 30 day’s fees implies ETH trades at 20x earnings. Remember ETH in PoS with have a claim on those fees.”
Forsage Scam Could Compound Selling Pressure
A crypto Ponzi scheme/pyramid scheme called “Forsage” or “Smartway Forsage” could increase Ethereum’s chances of moving lower.
Dovey Wan, a crypto commentator and partner at Primitive Capital, recently commented:
“just for whoever lives in CT bubble: the ETH price floor is not from a few foodcoin scams or potential defi vault explosion, sadly is from the liveness of Forsage, the ongoing $ETH version Plustoken.”
She thinks that the collapse of the Ponzi could result in selling pressure on the Ethereum spot markets.
Photo by Wenniel Lun on Unsplash Price tags: ethusd, ethbtc Charts from TradingView.com If Ethereum Doesn't "Power Above" This Level, Watch Out Below: Analyst