Ethereum Recovers 15% Within Minutes, is it Demonstrating Oversold Conditions?
On December 8, within 15 minutes, the Ethereum price increased by more than 15 percent against the US dollar.
Several traders expected Ethereum (ETH) to experience a short-term corrective rally after it dropped to a yearly low at around $82.
A Local Bottom
Prior to its price drop, a prominent technical analyst with an online alias “The Crypto Dog” said that Ethereum demonstrated a sign of a bottom and it could recover to a resistance level.
“ETH double bottomed on the 30 minute chart while BTC made a new low. First sign of a bottom on the ratio,” the analyst said.
Following the recovery, the analyst said that an increase in price to $100 is a possibility, given the rise in the daily volume of the digital asset.
“It smashed right through that resistance. At the next resistance now and it’s going to take a lot more firepower to break .028. Very impressive display, awesome volume. I would love to see this test $100-102 today.”
However, one trader stated that a further drop to the $85 support level and eventually to $50 still remains a possibility if the asset fails to sustain its volume.
“I’ve seen people targeting insane low targets for ETH but before going to $4, you do realize that there are supports to be broken, right? $85 still valid as a support and $50 is another option lower. It’s like December 2017 euphoria but reverse right now.”
Currently, it is difficult to forecast the price trend of ETH because it has consistently been one of the most volatile cryptocurrencies in the global market alongside Bitcoin Cash (BCH) and ERC20 tokens.
But, one positive element in the trend of Ethereum is that throughout the past several weeks, Ethereum has been able to maintain a relatively high daily volume at around $2 billion. As of December, the volume of ETH remains larger than that of Bitcoin Cash, Stellar, Ripple, and Bitcoin SV combined.
Given that ETH has dropped 93 percent from its all-time high, more than any top five cryptocurrency, if the trend of the crypto market reverses, oversold conditions of ETH could allow the asset to rebound with higher intensity.
Positive Developments in Ethereum Ecosystem
Su Zhu, the CEO at Three Arrows Capital, a forex hedge fund, said that the Coinbase team including its CEO Brian Armstrong, have been avid supporters of Ethereum for a long period and that the integration of new ERC20 assets, most of which are based on the Ethereum protocol, is a positive development for the Ethereum community.
“Don’t see a problem with Coinbase listing small market cap ERC20 tokens,” said Zhu. “They own a wallet, DEX, and broker-dealer already and are huge backers of the Ethereum ecosystem. I may not agree with their opinions but I respect their commitment to a vision. The market will decide if they are right or wrong.”
ConsenSys, the largest blockchain software firm in the market, has also vowed to begin working on products that can be actively utilized by users in the market to increase the adoption of Ethereum.
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