Just like stocks and other financial instruments, the second most valuable cryptocurrency in terms of market capitalization Ethereum is prone to price manipulation. It has a lower market capitalization, lower tradable volume and fewer regulations despite these metrics running into billions of dollars. This is one of the reasons why market whales can easily influence ETH’s price.
Technical Analysis on Ethereum’s Price
Since the bull-run in the crypto market, Ethereum has been one of the biggest gainers despite technical indicators showing overbought conditions. Ethereum’s price was below the 200 periods EMA line yesterday when it closed for the day. It continues trading below that level. Several cryptocurrency traders are, however, anticipating the price to get past the $200 mark quite soon. Fundamental and sentimental analysis has proven time and time without number that overbought levels do not mean anything when the news is right.
Looking at the price action of Ethereum in the past few days, one can determine that ETH can definitely get to the $200 mark. The observance has been made, however, that the recent spike in the price of ETH isn’t echoed across the crypto community.
A closer look at various charts on ETHUSD show that there may be a price drop with the overbought conditions. RSI and Stochastic RSI levels are scaring off traders from buying Ethereum as they are both overbought. This is backed by the fact that there are pullbacks in ETH’s price and lengthened shadows on candles at the 61.8% Fibonacci retracement level. This shows that the price increase is being driven by something other than mass investor interest.
Whales are creating FOMO so traders can get into trades, drive the price up, so they can sell. While the price of Bitcoin closed below the 50 period EMA, ETH’s price increased to more than $180 at the end of the week.
How Far are the Whales Taking this “Bull Run”?
If one takes a look at the one-week chart of ETHUSDShorts, one can understand. ETHUSDShorts formed a green candle for the first time in 7 weeks. Stochastic RSI is showing oversold conditions, and there is currently a large falling wedge chart pattern which could allow for an uptrend. Even with the overbought levels on Ethereum, the price still keeps growing while the Bitcoin-USD pair has continued to consolidate since the short bull-run. This shows that whales are ready to go to any length to make sure investors buy Ethereum.
This is a sign that ETH could in the coming days, experience a huge retracement. The only factor that could make ETH pull forward in the days to come is if the whales are willing to take it a step further and take the price to new levels towards $200 or even as high as $300. Ethereum has never been this overbought since its inception in 2015. It certainly could fall to a new swing low very soon. And the retail traders will shoulder the consequences of the coming price lows.