The investment sentiment on Wall Street is extremely low level. I don’t remember when investors had absolutely no tailwinds. This makes it hard for equities and other investment vehicles to gain traction. As a result the sellers have been in charge for a while. But today we want to shed some sunshine in the dark tunnel. We are highlighting an opportunity for a bottom to form in Ethereum (ETH-USD). It won’t be easy and there might be more dips before the spike.
But first I must still assume that machines are still selling rallies for now. Therefore, those who are chasing upticks late are losing money. For example ETH-USD has been falling for weeks, so I shouldn’t anticipate a bottom without irrefutable proof. I would rather miss on the start of the rally, than to find myself long too soon.
The stock market fell another 1% yesterday, but the bears did not do as much damage as they could have. Also the bulls have nearby lower levels that they absolutely must maintain. Otherwise there could be another 20% slide from the recent lows. A similar situation exists in Ethereum and crypto prices in general.
Ethereum Lows Are Important This Month
The recent lows of $880, better hold, otherwise, its slides 20% further from there. There is hope that this doesn’t happen, but even the biggest fans should entertain the possibility of failure. This correction was not a surprise to those who paid attention last year.
I have had the Bitcoin (BTC-USD) target of $19,000 since last November. As was my plan originally, I initiated positions in Ethereum as a proxy for crypto. ETH-USD makes sense now partly because of its relative position to 2018 highs.
Ethereum is now about 30% below that mark. Bitcoin is still about flat with it, which suggests that most of the 2121 fat and ETH is out. This doesn’t automatically insure a bottom, but it’s a significant element of a bottom. From a price action perspective, that’s a technical favor rebound rally in the next three weeks. But first the $880 floor must hold.
If the $880 floor holds, a sizable rebound rally will follow. The gains from it which could extend 50% before hitting serious resistance at $1,700. That is likely to be a pivotal level, since they failed to hold it last month. This will not be easy, but the buyers have the proper setup for it. What they need is a slight cooperation from the headlines.
ETH-USD Is Risky But Worth It
Sentiment on Wall Street is extremely sour because there isn’t much good news to celebrate. Every tailwind is for the bears, and the worst of them is the rhetoric from the U.S. Federal Reserve. Last year, they assured us that inflation was transitory. This week Fed chair Powell admitted that he lacks knowledge in this thing he’s trying to fix. Imagine if a surgeon a similar thing while in the operating room.
This degrades the investors’ confidence in our financial leaders. Such headlines create doubt, which bring out the propensity to sell. Cryptocurrency investments are already speculative in nature. So, they already lack the benefit of the doubt. Now that the CBOE Volatility Index (VIX) is 30, investors would rather buy safer assets like say Apple (NASDAQ:AAPL) to name one.
Nevertheless, I chose to allocate a portion of my portfolio to a high risk opportunity. I designated it to be in the crypto-sphere, and Ethereum is one of my coins. So far it has rewarded me well, so I am confident that ETH-USD will rebound once again. I am not exactly sure from what level it starts, so I am partially long.
There are technical threats still looming to cut Ethereum in half. So new investors should consider, like me, only deploying starter positions. I don’t assume I can nail a perfect entry point, but I can average into an overall reasonable cost basis.
Accumulating highly volatile assets like cryptocurrency is easier for the Long haul. Meanwhile, in this short term there are an extremely profitable spike brewing. Investors should attempt to capture it.
On the date of publication, Nicolas Chahine held ETH-USD. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.