The price of Ethereum has crashed recently. After getting intra-day above $400 in the second week of June, it now trades around $150, a 60 percent decline. Should Ethereum holders worry? If not, as of when does it really become concerning?
The answer to that question is very simple: Ethereum’s price must hold $125 in order to be considered in a long term bull market.
The chart below makes our point. Any market is driven by trendlines, and Ethereum’s price chart is no exception. The lower of the two trendlines is the most imporant one.
Note that the chart was created on Saturday evening (July 15th). In the meantime, Ethereum is trading almost 20 percent lower.
The lower trendline has support at $125. It is absolutely critical that Ethereum does not go below $125 in order to remain in its long term bull market.
Why is $125 so important? That is because it connects important price levels in the form of a trendline. In March, Ethereum’s price rise accelerated, and that is the moment it started to create a support trendline on the chart. The rally got momentum in May and June. But the fundamental uptrend started in February/March so that timing is key for the trendline.
Although momentum has faded in the crypto market in recent weeks, cryptocurrencies should continue their rise sooner or later. Crypto is here to say, but, admittedly, things got out of control in May and June, with price rises which went parabolic. That cannot hold.
So right now, presumably, the speculators are leaving the arena. Crypto, and Ethereum specifically, has to show how many true believers it has. Those are the holders, no matter how low prices go. They will provide support to the prices. It could take several months or even a year or two, we do not know the timing, but at a certain point the price will stop falling. It will be very important to see where that support price level will be. If it is above $125, it would be extremely good for Ethereum.
Our long term Ethereum price forecast of $1000 is still accurate according to us because the fundamentals from our forecast are still in place. But the market has to prove it though.