Ethereum is frozen as the crypto winter continues.
And it’s not frozen in a great spot as it carves out a range near the lows of the year. I would have liked to have seen a stronger bounce after the drop since late January but so far it hasn’t materialized. Instead, it’s stuck near $2000 and we’re waiting for the next move.
On the daily chart, I don’t think you need to get any more complicated than this.
The next move will be dictated by which side of that wedge we break out on but I’m biased to the downside because the overall backdrop in both crypto and risk assets is poor at the moment.
The bounce from the bottom has been uninspiring and it’s tough to find and real advocates for crypto right now. In venture capital, AI is soaking up all the funds and even some long-time crypto builders have filtered out.
When I zoom out further, I’m reminded of just how brutal the 2022 selloff was it crashed to a low of $879 from a high of $4867 from November to June.
This time, ETH peaked at $4822 in August (though it stayed nearby until October) and has fallen to $1975 so far. Unfortunately, the selloff patterns look awfully similar and the double top is ominous.
Beyond just crypto, what worries me about this chart is what it says about broader risk appetite. There has been some disconnect between crypto and tech that’s unique over the past decade but I find it hard to imagine another trip down to $800 without some serious pain in the Nasdaq as well.
All the elements are there as the worries about AI disruption spiral. Even a good set of earnings so far in Q1 hasn’t helped to change the narrative as we brace for more and more model releases. What happens when OpenAI delivers another leap forward or Claude Plugins disrupt an incumbent?
This article was written by Adam Button at investinglive.com.