The Ethereum price continues to outperform Bitcoin and holds above $4,000 despite the mass liquidation event over the weekend. However, it’s important to remember that ETH doesn’t operate in a vacuum and is still vulnerable if BTC selling resumes this week.
Remarkably, after collapsing 30% intraday, Ethereum (ETH) ended Saturday down just 2.3%. Part of the reason ETH is doing well is that BTC is doing so poorly. As a result of Bitcoin plunging to $41,000, the ETHBTC pair has broken out on the upside, encouraging Ethereum buying vs Bitcoin. As a result, technically speaking, the ETH price action is constructive. And unlike BTC, Ethereum never crossed below the 200-day Moving Average during Saturday’s rout. Furthermore, the bounce from the $3,240 helped the price close above the 100-DMA at $3,875. However, violent sell-offs often bounce (dead-cat bounce) before continuing, meaning Ethererum is not out of the woods yet.
ETH Price Analysis
The daily chart highlights Ethereum’s resilient reaction to Saturday’s correction. In my opinion, the price needs to hold above the 100-DMA (on a closing basis) to avoid further weakness this week. However, in that event, a period of consolidation is likelier than an instant return to the $4,950 range.
The biggest threat to the Ethereum price is if Bitcoin fails to recapture the $50k mark. In my opinion, BTC could retest the $41k lows sometime this week, which will undoubtedly exert downside pressure on the broader market. If that happens, ETH may lose the support of the 100-DMA and extend lower towards the 200-Day at $3,186, which, as we saw over the weekend, is a significant support level, that should attract buying.
For now, it’s too early to say if the worst is over for Ethereum. Whilst I still believe that ETH will outperform BTC, my view is that BTC weakness will be the driver and not Ethereum strength. Therefore, I expect the Ethereum price to take another look below $3,875 in the coming sessions.
Ethereum Price Chart (Daily)
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