This month’s crypto retreat may get worse if key charts for Ether, the second-largest token, prove prophetic.
(Bloomberg) — This month’s crypto retreat may get worse if key charts for Ether, the second-largest token, prove prophetic.
Both Ether and a gauge of the top 100 coins have shed about 12% so far in August, the most since November last year, as the prospect of higher-for-longer interest rates hurts demand for speculative investments.
Ether as a result has traced a head-and-shoulders price pattern, a technical study that signals further declines and posits a potential downside price of $1,100. The token edged up 1% to $1,649 as of 8:23 a.m. Wednesday in London.
Meanwhile, Ether’s Bollinger bandwidth is close to the narrowest in data compiled by Bloomberg going back to 2018. The bandwidth is the gap between the upper and lower bands in a Bollinger study, a popular way of gauging volatility.
Technical analysts often view a tight Bollinger bandwidth as a harbinger of increased swings in an asset. Ether has also breached the lower band, signaling a volatility spike may lead to losses rather than gains.
“The summer lull appears to be over and the market is feeling a little nervous following some very sharp moves last week amid low liquidity,” said Caroline Mauron, co-founder of digital-asset derivatives liquidity provider OrBit Markets.
Some fast-money traders have made short-term bets on a moderate Ether retreat based on macro developments, but others with a longer term perspective are positioning for a lift from pending approvals of the first US exchange-traded funds investing in Ether futures, Mauron added.
A rough potential launch date for the first of those ETFs is Oct. 11 if the US Securities & Exchange Commission allows the products to go ahead, according to Bloomberg Intelligence ETF analysts James Seyffart and Eric Balchunas.
At the same time, the kind of hype that preceded the first Bitcoin futures ETFs in the US back in 2021 is absent, stoking some doubts as to whether similar vehicles for Ether will excite a durable rally in the token.
Bitcoin rose about 1% to $26,112, while smaller cryptoassets such as BNB and Solana also posted gains. Bitcoin has rebounded 58% year-to-date from last year’s crypto rout, while Ether is up 37%.
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