The cryptocurrency market is currently in a state of uncertainty, as there are concerns that Grayscale might continue to sell its Bitcoin holdings. This has led to a sell-off in the market, with investors also shedding shares of the GBTC ETF. As a result, Ethereum, the second-largest cryptocurrency, has entered a correction phase after reaching a local top at $2700.
Over the past two weeks, the price of Ethereum has dropped by 9% and is currently trading at $2467. Future traders are expecting a prolonged correction for Ethereum, as indicated by the increased implied volatility and option writing for the coming months.
Expanding Channel Pattern Sets Dive Below $2400
The formation of an expanding channel pattern in Ethereum reflects increased uncertainty among market participants. Despite this, a healthy retracement in the price of Ethereum keeps the overall trend bullish. The intraday trading volume for Ether has decreased by 39%, indicating a loss in momentum.
Ethereum Price Prediction
The recovery in the price of Ethereum over the past two months can be observed through an expanding channel pattern. The coin price has consistently rebounded from two trendlines within this pattern, suggesting that traders have taken notice of its structure. However, on January 12th, Ethereum experienced a reversal from the upper trendline, initiating a new bear cycle within the channel.
Change in Strategy Indicates Possibility of Sideways or Correction Trend
Recent data from Deribit Insight shows that Ethereum’s implied volatility has declined significantly over the past week. This decline is attributed to structured call selling in both markets, indicating a change in strategy by some investors. Heavy call selling at psychological levels suggests that option traders believe Ethereum is less likely to surge higher in the coming months and may remain in a sideways or correction trend.
Will ETH Price Correction Hit $2000?
If selling pressure continues in the broader market, it is likely that the price of Ethereum will break its immediate support at $2400. This could lead to a further decline, with the price retesting the channel’s lower trendline at $2300. The breakdown of this trendline would intensify supply pressure and potentially push the price of Ethereum down to the following support levels at $2140 and $1920.
Hot Take: Uncertainty Looms as Ethereum Enters Correction Phase
The recent sell-off in the cryptocurrency market, driven by concerns over Grayscale’s Bitcoin holdings, has led to a correction phase for Ethereum. The formation of an expanding channel pattern and the decline in implied volatility indicate that traders are expecting a prolonged correction for Ethereum. If selling pressure continues, the price of Ethereum could potentially drop below $2400 and test lower support levels. This uncertainty highlights the need for caution when trading cryptocurrencies in the current market conditions.
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