Ether price loses 12.5% amid Evergrande contagion fears
On Sept. 20, Ethereum’s native asset Ether (ETH) prices fell amid a broad selloff in the cryptocurrency market, fueled by concerns over a potential property bubble catastrophe building in China.
On the Coinbase platform, the ETH/USD exchange rate fell as much as 12.52 percent to $2,911, reaching its lowest level since the beginning of August 2021. Bitcoin (BTC), Binance Coin (BNB), Cardano (ADA), Solana (SOL), and other major tokens all fell in unison in the crypto market.
The dip mirrored the tone of the larger market, as US equities fell after a day of losses in both the Asia-Pacific and European indices. On the other side, the US dollar and government bonds rose as a result of haven purchasing.
A liquidity problem at Chinese property developer Evergrande was at the heart of Monday’s sell-off. The world’s most indebted property developer owes creditors more than $300 billion. On includes a crucial interest payment deadline on its offshore debts, which is coming up this Thursday.
According to DW, if the Evergrande collapses, it may pull several banks down with it, just like the Lehman Brothers did during the 2008 housing bubble crisis in the United States.
Despite the fact that Ether does not move in lockstep with global markets, its 30-day correlation with Bitcoin, the top digital asset sensitive to macroeconomic factors, is close to 0.85. As a result, the cryptocurrency looked to be suffering as a result of China’s impending housing crisis.
The most recent round of selling in the Ethereum market also generated a traditional bearish pattern, which has a 75% success rate in achieving its downward goals.
The “Double Top” pattern forms when the market rallies strongly, pulls back, climb again towards the previous peak, then corrects again — all while standing above so-called neckline support. Finally, the price falls below the neckline and targets levels as deep as the gap between the peak of Double Top and the neckline.
Ether looks to be in the middle of painting a Double Top design. The chart below indicates that the cryptocurrency peaked around $4,385 on May 12, dropped to the neckline support of $1,984, and then climbed to another sessional peak of $4,030 on September 3.
If the Double Top pattern holds, the ETH/USD rates might continue their current selloff toward $1,984 before a possible breakdown move. Nonetheless, it does not appear like ETH/USD will go violently below the $1,984-neckline.
The price is also close to Ether’s 50-week exponential moving average (50-week EMA; the velvet wave), which is now around $2,118, providing another support layer to protect Ether’s bullish bias. Following stronger ETH/USD pullbacks, the wave previously served as an entry point for bulls.
On a daily basis, the next support line for Ether looks around its 200-day EMA (the orange wave) at $2,536. As a result, a rapid pullback from the mentioned level might nullify the Double Top setup.
Ether continues to seek adoption in the face of Ethereum’s role in supporting the thriving decentralized finance (DeFi) and nonfungible token (NFT) industries. Cathie Wood, CEO of Ark Invest, stated at the recent SALT conference that investors should devote at least 40% of their crypto portfolios to Ether.
Excerpts from Wood’s statement: “I’m interested with what’s happening with DeFi, which is collapsing the cost of financial infrastructure in a way that I know the traditional banking sector does not comprehend right now.”
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