Ether (ETH) Rebounds, Potential Breakout on the Horizon Amid FTX Liquidation Fears
Summary:
Ether (ETH) rebounds by over 4.5% to $1,622 after hitting a six-month low. Fears of a potential FTX liquidation ease, while experts argue that FTX's crypto holdings are mostly illiquid and won't harm the market. Short liquidations and oversold conditions contribute to the ETH price recovery. Technical analysis suggests a potential breakout, targeting $1,740 in September. However, a pullback could lead to a decline to $1,500. No investment advice. Conduct own research.
Ether (ETH), the native token of Ethereum, saw a gain of over 4.5% on Sep. 12, reaching $1,622, following a drop to its lowest level in six months the previous day. The recovery in ETH price on Sep. 12 came as concerns about a potential FTX liquidation subsided. FTX court filings revealed that the crypto exchange holds $3.4 billion worth of cryptocurrencies, including significant amounts in Solana (SOL), Bitcoin (BTC), and Ether. FTX has requested a New York court to sell its crypto holdings to repay its creditors. The court's response to this request is expected on Sep. 12, but some believe that approving the sale of $3.4 billion worth of crypto assets could trigger a market crash. However, according to researchers at Messari, FTX's holdings mostly consist of illiquid and locked assets, indicating that they may not negatively impact the overall crypto market. The researchers argue that the market will likely be able to absorb the sell-pressure, given the relatively small amounts of assets that become unlocked on a monthly basis. For example, only $9.2 million worth of Solana gets unlocked per month. Additionally, FTX's BTC holdings represent only about 1% of the coin's weekly trading volume. It is worth noting that Ether's price has fully recovered from the losses it experienced the day before. On Sep. 12, the Ethereum market saw an increase in short liquidations for Ether-linked derivatives, with $8.37 million worth of short positions liquidated compared to $1.66 million in long positions. The combination of new buyers and short liquidations has contributed to the rise in ETH price. The bounce in Ether's price is said to be a result of it entering the "oversold" zone, as indicated by the daily relative strength index (RSI) dropping below 30 on Sep. 11. Moreover, the bounce in ETH price has been supported by an important support level at $1,545. The current technical analysis suggests that Ether's price is approaching the upper trendline of a falling wedge pattern, signaling a potential breakout. Falling wedges are bearish reversal patterns that typically resolve after the price breaks above the upper trendline. If Ether manages to decisively close above the upper trendline, it may reach $1,740 in September, an increase of over 8% from its current price levels. On the other hand, a pullback from the upper trendline could lead to a decline in ETH price, potentially dropping it to around $1,500, an 8% decline in September. As always, it is important to remember that this article does not provide investment advice, and readers should conduct their own research before making any financial decisions.
Published At
9/12/2023 12:47:22 PM
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