Ether drops to $ 1.7,000 as lower bitcoin prices weigh on larger market

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Ether and other alternative cryptocurrencies, commonly known as altcoins, are taking a hit alongside bitcoin as the austere macro mood overshadows bullish idiosyncratic narratives.

The native blockchain Ethereums token is trading near $ 1,758 at press time, down 6% on a 24-hour basis. The cryptocurrency hit a three-week low at $ 1,721 at the start of the day, after peaking above $ 4,000 in May, according to data from CoinDesk 20. Other major altcoins like XRP, the cardano, the uniswap, the chain link and the stellar show drops of about 10%. Bitcoin, the market leader in crypto, is down 5% to $ 29,700.

We are seeing movements of risk reduction on stocks, currencies and commodities, said Edmond G., head of trading at B2C2. Crypto is not immune to traditional market sentiment and is caught in the lower legs as well. Until now saw very little movement [higher in ETH] while moving towards the 1559 upgrade of the proposed Ethereum Improvement Proposals (EIP) [for] August 4.

Related: Bitcoin Struggles Below $ 30,000; Next assistance at $ 27,000

Global stock markets faced selling pressure on Monday, as the dollar rose over fears that a rebound in coronavirus cases could derail the global economy. As a result, bitcoin and crypto, being at the end of the risk curve, suffer losses.

According to some analysts, the impending Ethereum upgrade aims to burn off some of the transaction fees and make Ether less inflationary.

Ether consumption would be significant even with the growth of Layer 2 scaling solutions, said Noelle Acheson, head of market analysis at Genesis Trading, a sister company of CoinDesk. No matter how much is burned, it will be more than what’s currently being burned, so the upgrade reduces supply growth.

Acheson said that while the upgrade won’t directly reduce ether transaction fees, a weak spot for DeFi protocols and merchants, it will make them more transparent and manageable.

Related: Bitcoin Falls Below $ 30,000 For First Time In 4 Weeks

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However, Delta Exchange CEO Pankaj Balani said the markets incorporated the EIP bullish narrative earlier this year.

Ether nearly doubled to $ 4,000 in the four weeks leading up to mid-May, even as bitcoin traded between $ 50,000 and $ 60,000. The decoupling of ethers was primarily fueled by the optimism surrounding the EIP upgrade.

Crypto markets are now in slow progress and vulnerable to negative macroeconomic news, Balani said on a WhatsApp call. Ether and other altcoins will experience a bloodbath if bitcoin slips towards $ 20,000.

The likelihood of bitcoin falling this low and destroying the wider market has increased as the cryptocurrency seeks a foothold below $ 30,000. According to trader and analyst Alex Kruger, when a price drops and stays at the lows, forming a ledge, it means the market is doomed to fail. You can see it in most charts over the past 24 hours.

According to Patrick Heusser, chief trading officer at Crypto Finance, $ 29,000 and $ 1,700 are crucial supports for bitcoin and ether, respectively. How far can he go? Probably up to $ 20,000, he said. If you look at the structure of the cash pool, there haven’t been a lot of trades on the upside except a little around $ 23,000.

Ether could face greater selling pressure as blockchain data shows increased flow of coins on exchanges. We see lending platforms like BlockFi sending large amounts of ETH to Coinbase, perhaps to liquidate them, said Alex Svanevik, CEO of blockchain data firm Nansen.

The only positive news for crypto bulls is that the market is seeing low volumes while declining. This potentially signals that sellers are depleted and the market is waiting for positive news, Heusser said.

In addition, the stock markets are showing signs of stability at the time of publication. European markets are trading higher and S&P 500 related futures are showing a positive open with a gain of 0.60%. This could be a period of a rebound for crypto, as the stock market panic appears to be over, Kruger said. It makes sense to move the stop losses on bitcoin shorts to $ 31,000.

Also Read: Bitcoin Falls Below $ 30,000 For First Time In 4 Weeks

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