As Bitcoin and the aggregated cryptocurrency market face dire selling pressure, major altcoins like Ethereum (ETH) have been caught within firm downtrends that have cut significantly into the recent gains they incurred throughout the course of their intense 2020 uptrends.
Analysts are now noting that ETH is positioned to see significantly further losses in the near-term, which could lead the crypto to plummet as low as $180 in the days ahead.
In spite of a weak technical situation, one interesting occurrence seen while looking towards the spread between DAI and USDC may suggest that now is a “decent re-entry level” for ETH.
Ethereum Sees Dire Technical Weakness as Market Continues Descending
At the time of writing, Ethereum is trading down just over 2% at its current price of $219, which marks a slight decline from daily highs of just over $225.
The cryptocurrency’s downtrend first began exactly one week ago, when the crypto rallied up to highs of $275 before plummeting to lows of $210. In the time since this capitulatory selloff, the crypto has been trading sideways around its current price levels, struggling to garner any decisive trend.
Luke Martin, a popular cryptocurrency analyst on Twitter, explained in a recent tweet that he believes ETH could soon target a downside movement to $180.
“This is the next setup I’m watching: If $ETH can close below the current daily support around 222, then I would expect expansion lower towards 180-200,” he explained.
That $ETH short worked out nicely.
This is the next setup I'm watching:
•If $ETH can close below the current daily support around 222, then I would expect expansion lower towards 180-200. pic.twitter.com/nsY3JEdnSV
— Luke Martin (@VentureCoinist) February 29, 2020
This Strange Factor Shows Now Could Be a Good ETH Entry Point
Su Zhu, the CEO at Three Arrows Capital, spoke about an interesting occurrence seen while looking at the DAI/USDC trading pair, explaining that this can act as a sign of risk-aversion towards ETH, signaling that now may be a good re-entry level for Ethereum.
“DAI/USDC at the highs of the year now, a good barometer of risk aversion. May signal now is a decent re-entry level on the $ETH/DAI and ETH/USD pairs,” he explained.
DAI/USDC at the highs of the year now, a good barometer of risk aversion
may signal now is a decent re-entry level on the $ETH/DAI and ETH/USD pairs pic.twitter.com/dEYSjzW6Pc
— Su Zhu (@zhusu) March 1, 2020
He further went on to explain his reasoning, noting that DAI trades above its USDC peg when there are large ETH/DAI liquidations.
“DAI trades above peg whenever there’s large liquidations on ETH/DAI, demand for DAI. It will result in the SF going lower on MKR and represents a flushout of leveraged longs,” he noted.
DAI trades above peg whenever there's large liquidations on ETH/DAI, demand for DAI. It will result in the SF going lower on MKR and represents a flushout of leveraged longs
— Su Zhu (@zhusu) March 1, 2020
Although Ethereum’s near-term technical weakness may lead it to see slightly further downside, it is possible that the intense liquidation of leveraged longs may mean that further upside is looming on the horizon.
Featured image from Shutterstock.