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Breaking News: Ripple Wins Key UAE Bank Partnership To Support Digital Asset Infrastructure

Why Ethereum Could Present Unique Opportunity For Investors If It Drops Below $1,600

Reynaldo Marquez
Reynaldo Marquez
Last Updated: February 9, 2023 6:00 pm
2 mins read
Ethereum

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Ethereum has been retracing on its previous weeks’ profits and seems ready to re-test support levels below its current price. The crypto market has seen significant gains as the macroeconomic landscape shows signs of improvement, but the crypto winter is not in the review mirror yet.

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As of this writing, Ethereum (ETH) trades at $1,630 with a 1% loss in the last 24 hours. Over the previous week, the cryptocurrency recorded sideways price action outperforming other assets in the top 10, such as Bitcoin (BTC) and XRP, which recorded a 5% and 3% loss, respectively.

Ethereum ETH ETHUSDT CHART 1
ETH’s price with some losses on the daily chart. Source: ETHUSDT Tradingview

One Macro Event, Two Opportunities For Ethereum

Per a report from investment firm Blofin, the two largest cryptos by market capitalization, Bitcoin and Ethereum, have seen relatively slow price action over the past 24 hours. However, this status quo could change in the coming days.

At least in the crypto options sector, there has been a decline in Implied Volatility (IV), which measures expectations of future price movement. This metric is approaching its January 2023 level, suggesting the IV is bottoming and could spike again.

As seen in the chart below, IV declined after a significant increase in early January. At that time, the price of Ethereum and other cryptocurrencies appreciated and trended to the upside.

Ethereum ETH ETHUSDT Chart 2
ETH Options’ Implied Volatility declines. Source: Blofin via Twitter

In the current context, Blofin notes less interest from Market Makers to defend ETH’s current levels. These investors might hedge against the spike in IV and potential downside price action from macroeconomic events. The firm noted:

Ether’s situation is not very optimistic. (…) MMs will not tend to buy in spots hedging against the gamma exposure once the price collapses before the weekend.

In other words, large investors could be waiting for a clearer view of the macroeconomic landscape. Next week, the U.S. will publish its Consumer Price Index (CPI), a proxy to gauge inflation in the dollar.

If the metric beats expectations, with recent data pointing towards a strong U.S. labor market, the Federal Reserve (Fed) could exercise more pressure on global markets, including digital assets. These measures could lead Ethereum to re-test its yearly lows.

In a separate report from the on-chain firm Jarvis Labs, an analyst points towards the clues hinting at a change in the market regime. Supported by a decline in the U.S. dollar and a historical bullish signal, Bitcoin’s (BTC) golden cross of its 50-day moving average above the 200-day moving average.

ETH ETHUSDT Ethereum
Source: Jarvis Labs

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Whenever these moving averages intertwine, the crypto market enters a new bull run amid a spike in volatility and some price declines in the short term. Thus, if ETH crashes below $1,600, long-term holders could take advantage of a potential opportunity.

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Reynaldo Marquez
Reynaldo Marquez

Reynaldo Marquez

A literature major, Reynaldo Márquez has been deeply immersed in the crypto industry since 2017. His journey began with translating articles for various crypto news outlets, a role he took on with zeal. In 2018, amidst a challenging market, he embraced his first writing assignment, demonstrating his unwavering commitment to the nascent industry and the promise of change it bears for many people worldwide.
In March 2021, he joined the prestigious crypto news outlet NewsBTC and Bitcoinist, where he not only reported on the latest crypto news but also had the privilege of interviewing some of the industry's most influential figures. A year later, his dedication and hard work were recognized, and he was promoted to Managing Editor, a position he currently holds with pride.
He believes in honesty, good communication, hard work, and the power of cryptocurrency and its potential to transform people's lives, especially those alienated by the legacy financial system. Born in 1992 in Venezuela, Reynaldo is familiar with how governments and central banks can negatively affect people, their everyday lives, and their futures by creating inflation and erasing their hopes for a better future. Thus, like many Venezuelans, he embraced this new technology to help him and his family navigate difficult times.
In another life, Reynaldo would have pursued a career as an investigator, most likely tracking down the origins of the Cyberpunk movement with the publication of William Gibson’s ‘Neuromancer.’ The intersection between fiction and reality, with the materialization of Bitcoin in 2009, would have allowed him to dive deep into the crypto sphere as something more than a financial phenomenon but also a cultural shift in society that was brewing since the XX century, and maybe even sooner, in the XIX century with the publication of Henry David Thoreau’s ‘Civil Disobedience.’
But that’s for another life. In this one, Reynaldo has been trading to improve his trading skills. Since 2023, he has been trying to learn Python to create successful strategies and find ways to execute them. It is a difficult task, which continues to keep him busy today and will most likely continue to keep him busy in the near and long term.
In his free time, he enjoys lifting heavy objects, reading, watching movies, and listening to his favorite music. Some of his favorite authors are Walt Whitman, William Faulkner, Allen Ginsberg, James Baldwin, Raymond Carver, Ray Bradbury, George Orwell, Mario Vargas Llosa, Reinaldo Arenas, Rafael Cadenas, and many others. Lately, he has been primarily interested in reading about dystopic societies, a topic that deeply resonates with the crypto industry.
Since 2023, he has lived in Spain with his wife. He loves the weather, the food, and the people and their culture. They both expect to travel much more within the country they now call home and beyond its border. He hopes to retire with his wife, maybe in a quiet place near a beach, but most likely in a city close to a library and a university with his kids and, hopefully, grandkids.

Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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Reason to trust

Strict editorial policy that focuses on accuracy, relevance, and impartiality
Created by industry experts and meticulously reviewed
The highest standards in reporting and publishing
How Our News is Made

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Ad discliamer

Morbi pretium leo et nisl aliquam mollis. Quisque arcu lorem, ultricies quis pellentesque nec, ullamcorper eu odio.

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Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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