Ether Price Analysis After A Crash Of 50% In 15 Days

Summary

  • After a stupendous rally from  $8 to $418, ether corrected 50%, back to $206
  • Chart has formed a minor double bottom at $210-$200 range
  • $160 and $120 are strong support levels in which long term investors can add positions
Ethereum, the blockchain application platform, enjoys second position in the crypto market. Ether is the cryptocurrency and termed as the fuel of ethereum has a market cap of $22 Billion as of 27th June. Ether was trading at a mere $8 at the start of the year and it almost zoomed 4000 times in the past 6 months and hit an all time high of $418 on 12th June. Today, on 28th June, it is trading at $222 and touched a weekly low of $206 which is almost 50% correction from its all time high.

Ethereum
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About ethereum
Ethereum is a decentralized platform that runs smart contracts. Smart contracts are applications that run exactly as programmed by the developers without any possibility of third party interference, downtime and censorship with least minimum chance for fraud compared to centralized applications.


The applications built on ethereum (known as DAPPS or decentralized applications) run on a custom built blockchain, a decentralized powerful shared global infrastructure that can move value around and represent the ownership of property. This enables developers to create markets, store registries of debts or promises, move funds in accordance with instructions given long in the past and many other business use cases that have not been thought through, all without the involvement of an intermediary.

The project was bootstrapped via an ether pre-sale in 2014. It is developed by the Ethereum Foundation, a Swiss nonprofit, with contributions from great minds across the globe. Currently the development community is headed by Vitalik Buterin, a 23 year old techie.

Reasons for recent correction

1. Substantial amount of ICOs
As I mentioned above, applications can be build on top of ethereum blockchain and the teams behind these applications collect ether from public in exchange of their own coins which are categorized as ERC tokens. The number of ICOs running currently can be found here. A few among them where able to collect ether worth millions of USD in 30-45 seconds. Many of these ICOs created heavy congestion in the ethereum blockchain and created huge transaction backlogs. This has created concerns about the current scalability of ethereum. Also there were rumors that status ICO team has dumped a portion of their ether after the ICO completion.

2. Ethereum flash crash at GDAX
Last week, the digital currency exchange run by Coinbase - GDAX experienced a flash crash in its USD – Ethereum market. Within seconds the price of ETH crashed from ~$320 to as low as $0.10. Though price recovered quickly, the rapid price movement has shaken the confidence of investors and many have liquidated their position in ethereum. After the root cause analysis, coinbase announced that GDAX will be using company funds to reimburse customers who suffered losses as the result of a margin call or stop loss order executed.

3. Hoax - Vitalik Buterin died
It seems somebody deliberately created a hoax this week to bring down the price of ether, may be for accumulating more at a lower price. Vitalik Buterin responded with a classy tweet, showing the current block size of ethereum.

4. DDOS Attack in ethereum network
Ether scan of address 0x331d077518216c07c87f4f18ba64cd384c411f84 shows that there is a minor DDOS (distributed denial of service) attack is currently going on in ethereum network, which is creating transaction backlogs.

What chart says for Ethereum?

It seems ether has found a short term support at $210 levels.
Ether suport level$160 and $120 are strong support. $80 is the ultimate support level to watch out.
Ethereum strong supportsimage source:poloniex

 Conclusion

  • Interested long term investors should buy ether in SIP mode.
  • Always keep your long term holdings in personal wallets
  • It is prudent to book some profits at regular intervals in crypto space.

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