The Ethereum price (ETH), which recorded arguably its strongest rally in 2019 from September 7 to 19 fell by nearly 33 percent within a five-day span against the U.S. dollar as the cryptocurrency market corrected.
After surging from $168 to $224, the Ethereum price has retraced back to $168, erasing all of its gains throughout the past three weeks.
With strong fundamentals and signs of decent growth in recent months, many investors anticipated ETH to sustain its momentum in amidst of a market pullback. However, as bitcoin fell by $1,500 and major cryptocurrencies like Litecoin and EOS recorded losses in the 20 to 40 percent range, the Ethereum price struggled to maintain its monthly high.
Since mid-2019, the Ethereum blockchain network has started to show increased usage demonstrated by the increase in gas costs or transaction fees and the overall capacity of the gas limit.
Eric Conner, co-founder of EthHub said:
“For the first time ever, Ethereum’s block gas limit has passed 9,000,000. The network now has 12.5% more capacity than last week and is still on the rise.”
Anthony Sassano, an Ethereum analyst, also noted that Ethereum surpassed bitcoin in daily fees, indicating that the usage of the Ethereum blockchain by individuals and developers is rapidly on the rise.
To measure or predict the success of a blockchain protocol, fundamentals like the usage of the network, hash rate, daily transaction volume, and developer activity have to be considered. As of now, Ethereum remains as the only blockchain that comes close to bitcoin in some of the areas, far ahead of other alternative cryptocurrencies.
Still, despite strong fundamentals, when the cryptocurrency market pulled back following a decent rally, the price of ETH plunged to quarterly lows, unable to defend key support levels on the way down.
Technical indicators suggest that Ethereum along with other cryptocurrencies are oversold subsequent to the overnight correction and there is enough room for the asset to fall even further in the short term according to technical analysts.
Josh Rager, a technical analyst and a cryptocurrency trader, said that bitcoin could fall to as low as $7,000 depending on its reaction to the tests of lower-level supports, which would affect the price trend of Ethereum.
“If Bitcoin fails to break above the current level, we’ll get another retest of the support below – which has bounced once and could hold But if this isn’t a bear trap I do see price heading down to low $7ks Lots of buyer are waiting between $6,180 & $6,500,”.
The bitcoin market tends to be volatile but the magnitude of the drop left even the biggest investors in the cryptocurrency space bewildered, said Ran Neuner, the host of CNBC’s Crypto Trader.
“I’m a member of multiple Crypto chats/WhatsApp groups (none paid)- Some of these chats have the biggest whales and crypto names in the market… and not a single person has any idea what happened today.”
With the overnight correction of the cryptocurrency market breaking many of the strong lower-level supports that have held up relatively well since early 2019, technical analysts have become more cautious towards the short term trend of Ethereum and other crypto assets.
Click here for a real-time Ethereum price chart.