Ethereum Investors Brace for a Substantial Gain

Source: Filippo Ronca Cavalcanti / Shutterstock.com

Investment sentiment on Wall Street is extremely low. I can’t remember when investors had absolutely no tailwinds. It is therefore difficult for stocks and other investment vehicles to gain ground. As a result, sellers have been in charge for quite some time. But today we want to throw some sunshine into the dark tunnel. We highlight an opportunity for a fund to form in Ethereum (ETH-USD). It won’t be easy and there might be more dips before the peak.

But first, I still have to assume the machines are still selling rallies at the moment. Therefore, those looking for late rises are losing money. For example, ETH-USD has been falling for weeks, so I shouldn’t be anticipating a bottom without hard proof. I’d rather miss the start of the rally than find myself way too soon.

The stock market fell another 1% yesterday, but the bears didn’t do as much damage as they could have. Additionally, the bulls have lower levels nearby that they absolutely must hold. If not, there could be another 20% decline from recent lows. A similar situation exists in Ethereum and crypto prices in general.

Ethereum lows are important this month

Ethereum (ETH-USD) stock chart showing the important levels for this month

Source: Charts from TradingView

The recent lows of $880 hold better, otherwise they slide 20% further from there. There’s hope that doesn’t happen, but even the biggest fans should consider the possibility of failure. This correction did not surprise those who paid attention to it last year.

I had the Bitcoin (BTC-USD) target of $19,000 since last November. As was my plan originally, I initiated positions in Ethereum as a proxy for crypto. ETH-USD now makes sense in part because of its relative position from the 2018 highs.

Ethereum is now around 30% below that mark. Bitcoin is still roughly flat with it, suggesting that most of 2121 fat and ETH are depleted. This does not automatically provide a background, but it is an important part of a background. From a price action perspective, this is a technical favor bounce over the next three weeks. But first, the $880 floor has to hold.

If the $880 floor holds, a significant rebound will follow. The resulting gains could extend 50% before encountering serious resistance at $1,700. This will likely be a pivotal level as they failed to hold it last month. It won’t be easy, but buyers have the right setup for it. What they need is some light headline cooperation.

ETH-USD is risky but worth it

The sentiment on Wall Street is extremely bitter as there is not much good news to celebrate. Every tailwind is for the bears, and the worst of them is the rhetoric of the US Federal Reserve. Last year, they assured us that inflation was transitory. This week, Fed Chairman Powell admitted that he lacked knowledge in this thing he’s trying to fix. Imagine if a surgeon did the same thing in the operating room.

This degrades investor confidence in our financial leaders. Such titles create doubt, which brings out the propensity to sell. Cryptocurrency investments are already speculative in nature. So they already don’t have the benefit of the doubt. Now that the CBOE Volatility Index (VIX) at age 30, investors prefer to buy safer assets, such as Apple (NASDAQ:AAPL) to name just one.

Nevertheless, I chose to allocate part of my portfolio to a high-risk opportunity. I designated it as being in the crypto-sphere, and Ethereum is one of my coins. So far it has rewarded me well, so I am confident that ETH-USD will rebound again. I’m not sure exactly what level it starts from, so I’m partially long.

Technical threats still threaten to cut Ethereum in half. New investors should therefore consider, as I did, only deploying starting positions. I don’t suppose I can find a perfect entry point, but I can average out an overall reasonable cost basis.

Accumulation of highly volatile assets like cryptocurrency is easier in the long run. Meanwhile, in the short term, a hugely profitable peak in brewing is brewing. Investors should try to capture it.

At the date of publication, Nicolas Chahine held ETH-USD. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.

Nicolas Chahine is the Managing Director of SellSpreads.com.

Robert D. Coleman