Key Points
- Ethereum’s price fell by 6.6% last week, causing concerns of a potential market crash or altcoin rebound.
- Investors are increasingly turning to Bitcoin and stablecoins amid the volatile altcoin market.
Ethereum (ETH) ended last week at a trading price of $2,928, marking a 6.6% drop. This decline has left Ethereum at a critical point that could lead to a major market downturn or a broad altcoin recovery. Over the past two months, Ethereum, like the rest of the cryptocurrency industry, has been in a correction phase, establishing a descending triangle with a solid base around $2,889.
Altcoin Market Volatility
With the altcoin market experiencing increased volatility and downside risks, many investors are seeking safety in Bitcoin (BTC) and the stablecoin market. Recent cryptocurrency market data shows that Bitcoin’s price has increased nearly 2% in the past 24 hours, trading around $62,439.
Crypto analyst Benjamin Cowen, the founder of IntoTheCryptoverse, suggests that Ethereum’s price will continue to decline relative to Bitcoin until the Federal Reserve implements expected interest rate cuts. It’s predicted that the US Federal Reserve will begin these rate cuts as early as June as inflation rates start to decrease.
From a technical perspective, Bitcoin dominance continues to show potential for growth in the near term if current sentiments persist. Additionally, Bitcoin dominance has been forming higher highs and lower lows over the past year, with Bitcoin’s price already reaching a new all-time high. However, the weekly Bitcoin dominance chart shows a potential reversal backed by a bearish divergence on the Relative Strength Index (RSI).
Regulatory Challenges
The cryptocurrency industry is currently undergoing a significant transition towards mass adoption, driven by increased demand from institutional investors and greater regulatory clarity. There is also a strong demand to tokenize real-world assets on blockchains to access more global markets.
However, the continued growth of the altcoin industry has raised concerns for governments and the traditional banking sector. As a consequence, the Securities and Exchange Commission (SEC) has been pushing for Ethereum to be regulated under security laws rather than as a commodity like Bitcoin, Gold, or crude oil.
It’s expected that the US SEC will reject the spot Ether ETFs later this month. Moreover, Consensys has already sued the US SEC for its alleged attempt to classify Ethereum as a security.
Price Predictions
To prevent a potential altcoin crash, Ethereum bulls must defend the current support level in the coming weeks. From a technical perspective, Ether’s price against the US dollar needs to consistently close above $3,360 and the daily 50 Moving Average (MA). Failure to do so could see Ether’s price drop to as low as $2,351, aligning with the daily 1.618 Fibonacci Extension.
