The recent shocks in the crypto market due to the SEC have not been able to dislodge Ethereum’s price from the lateralization band within which it has been hovering for months either: what is the forecasting?
By now this range is very compressed, so many are predicting that sooner or later it will have to come out of it. But there is a lot of uncertainty about the direction.
Price forecasting: the compressed band of Ethereum
After making +49% in the first two and a half months of the year, Ethereum’s price began a long phase of lateralization that is still ongoing.
The beginning of that phase can be traced back to 17 March, when it rose above $1,700.
Since then it has continued to fluctuate between $1,700 and $1,950, with a brief seven-day excursion around mid-April in which it reached as high as $2,100.
But if one analyzes the trend in recent weeks, the range has become even more compressed. Virtually since 13 May it has never fallen below $1,770, except for a very brief moment, and it has never again risen above $1,920, except for a very brief moment.
The average value seems to be right near that $1,850 around which it has been hovering for the past two days.
Incidentally, $1,850 is also the level around which it has been oscillating since late April, so not only are such oscillations occurring within a very compressed range, but they have been going on for some time.
Breaking free from lateralization: what direction will the Ethereum price forecasting go?
At this point there are many who believe that a breakout is possible, namely the exit of the ETH price from this range.
However, the problem is that there is no agreement at all on the direction it may take.
According to some, the trend right now has begun to turn bearish, and they argue that we could go to the March lows again, below $1,400.
However, at present there are no clear signs that would concretely suggest the beginning of such a significant decline in the short term.
According to others, on the other hand, it could resume the rise of 2023, which was in fact interrupted in the second half of March, and perhaps return above $2,000, or perhaps even to the mid-April highs.
Moreover, in the event that the price of Ethereum moves before the price of Bitcoin, which is in a very similar situation, ETH will most likely follow the same direction as BTC.
The problems with the crypto markets
The current scenario in the crypto markets would seem poised for a retracement.
Let’s not forget that if BTC and ETH in the last week are only at about -2%, Binance coin and Cardano are at -15%, Polygon at -13%, and Solana at -9%. Dogecoin also loses a bit (-5%), while among the top 10 only XRP gains (+2.7%), followed by Tron (+2%).
Overall, the crypto market has lost some capitalization recently, falling from the $1.168 billion at the end of May to the current $1.106 billion. And this is despite the rise of Tether, from $82.8 billion in mid-May to the current $83.3, which is a new all-time high.
So as a whole, the crypto markets seem to be in slight trouble, and in the short term that trouble may even worsen.
But such a thing may not necessarily hurt the price of Ethereum, or Bitcoin.
In fact, at this time there is a tendency to distinguish between the price trend of the two main cryptocurrencies, and that of all others, excluding stablecoins of course.
In such a logic it is possible that the problems in the crypto markets may not weigh more heavily on the price of ETH, so much so that in recent days while many altcoins were losing, ETH was holding, as was BTC.
The new updates
New updates for Ethereum are also on the way
It is worth noting that recently, shortly before, or shortly after, the release of new updates, the price of Ethereum has been rising, only to rebound in the opposite direction and return more or less to previous values.
This suggests that even in the event of a rise in the short term, a reverse bounce of sorts could then be triggered again, such that the price would return to where it is now.
In other words, even a return to $2,000 or $2,100 would be no guarantee at all that the price would stay above its current levels.
In contrast, it does not seem possible that new upgrades could lead to price declines, although there are other causes that could create them.
The liquidity issue
Ethereum’s price now seems to be tied inseparably to that of Bitcoin.
As for BTC, there is doubt that there is not enough liquidity in the financial markets right now to drive up its price.
By now, Bitcoin’s market value is largely dependent on the liquidity present in the financial markets, so in a situation of lack of liquidity it seems difficult that there could be an increase in its value.
A very similar argument can also be made for Ethereum, not least because in the event of a significant movement in the price of BTC most likely ETH would follow closely.
The fact is that the Fed’s monetary policy remains decidedly tight, and the US government will issue large amounts of new bonds that could drain liquidity.
The overall scenario therefore seems to suggest a possible decline in prices.
But at the same time for the past few days a new period of decline in the Dollar Index (DXY) would seem to have begun, and lately when DXY was falling, BRC was rising, taking ETH with it.
So if the liquidity problem does not escalate, and the dollar is expected to continue this downward trend that has just begun, perhaps it is possible that not only will the price of Ethereum not fall, but actually rise.
As is clear, uncertainty is in order in such a scenario.