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Highlights
- Ethereum’s correction with Bitcoin suggests that it may continue to mirror BTC’s movement in 2024.
- Profit-taking among whales emerges as the biggest bottleneck to Ethereum price rally.
- Potential drop in the price of ETH may call for increased buy-the-dip opportunities.
The cryptocurrency market was extremely volatile on Thursday despite institutional investors’ comeback, reflected by the spike in the Bitcoin ETFs’ total daily net inflow to $417 million, according to SoSoValue data. Bitcoin is back under $70,000 reflecting the spike in volatility while Ethereum price slides into the red, hinting at a further drop to $3,000.
There are many reasons why ETH price might tumble to $3,000 before the end of the week, considering the current market structure. This article will delve into two key factors likely to contribute to this sell-off and discuss ways traders can sidestep the sell-off while planning accurately to dollar-cost average (DCA) in order to make the most out of the recovery.
1. Ethereum Price Correlation With Bitcoin
Bitcoin tends to shape the general outlook of the crypto market and Ethereum has often been the most impacted asset. Based on the chart below by Macroaxis, ETH closely follows BTC price action, suggesting that it is exposed to the majority of the risks the largest crypto encounters.
With the halving on the horizon, a sell-the-news narrative could result in another major correction in Bitcoin price. It has become a norm for investors to buy in anticipation of certain major events like the approval of the ETF in the US in January.
However, sell orders tend to surge immediately after the actual event, due to profit-taking. Following the spot ETF greenlight, Bitcoin price plummeted below $40,000 from highs close to $50,000 before advancing to set a new all-time high above $73,000.
Ethereum was also volatile during this period, falling from a December top of $2,715 to a January low of $2,165.
In the event traders decide to sell Bitcoin before halving, it would be prudent for investors to anticipate a drop in Ethereum price, possibly to $3,000 or below.
2. Ethereum Uptrend Stays Shaky, Here’s What Next
The sell-off around mid-March ignited immense buying opportunities among whales, but that interest seems to have withered this week. After peaking marginally below $3,700 a new wave of profit-taking engulfed Ether, dampening the uptrend while cultivating an ongoing correction.
Should the rising wedge pattern confirm, Ethereum will trigger another major sell-off pointing to $3,200 and $3,000 support areas, respectively.
The Moving Average Convergence Divergence (MACD) indicator affirms the bearish outlook, signaling a further decline from its current market value of $3,527.
A sell-off to $3,000 may, however, not be all bad news as investors can take advantage of the opportunity to buy more into Ethereum anticipating a major parabolic rally after the Bitcoin halving.
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