In two short weeks, ETHUSD has devalued by 50% of its market value. With little to no relief for the underwater bulls, ether seems to be accelerating downward as buyer confidence is lacking and showing signs of capitulation. The entire crypto market, as a whole, is showing signs of capitulation as many alts have seen similar devaluations in shorter periods of time than ETHUSD. Similar to many other coins, ether is penetrating long-held support with very little ease:
Figure 1: ETH-USD, 1-Day Candles, Macro Trend
As a general idea of just how extended the market is, take a look at the 50 EMA (the blue curve) in the image above. The 50 EMA acts as a fast-acting equilibrium curve that shows the price relative to its price history. Currently, the market is highly separated from its equilibrium. Often, when this happens, the market goes through a capitulation phase that has a very strong reaction causing both short profit taking and bottom-callers to shove the price strongly back in the direction it came from.
The 127% Fib extension of the most recent bullish rally on ETHUSD reveals a likely target for this capitulation. Historically, this price level (the $230 area) has also served as a key area for buyer interest to step in:
Figure 2: ETH-USD, Daily Candles, 127% Fib Extension
Our current trend is showing an expansion of volume and price spread — very similar to the two v-bottom reversals shown above. Right now, it’s nearly impossible to tell where the true bottom will be, but I would find it highly unlikely to not see a snapback from this strong round of selling across the crypto market.
Something else that’s noteworthy about this move is the recent bear flag ether broke out of:
Figure 3: ETH-USD, Daily Candles, Bear Flag
