Ethereum, still the second largest cryptocurrency with a market cap of ~$39B, was enjoying a strong 2020. ETHUSD was up 282% YTD until the start of September. The last few days, however, seem to have brought the bulls’ winning streak to its end.
The price of Ethereum collapsed from as high as $489 to less than $310, erasing over 36% of market value in just a week. As of this writing, ETHUSD is changing hands at roughly $350. The only question is: is this a buying opportunity or the start of a larger selloff?
To find out, we decided to take a look at the recent plunge through the prism of Elliott Wave analysis. The hourly chart above reveals it can be seen as a five-wave impulse pattern, labeled 1-2-3-4-5. The five sub-waves of wave 3 are also visible and marked i-ii-iii-iv-v.
According to the theory, impulses show the direction of the larger trend. In other words, once the current corrective recovery ended, traders should expect more weakness to follow. The exact depth of the a-b-c retracement is unknown, but targets below $310 lie ahead when Ethereum bears eventually return. If this count is correct, the rest of 2020 is going to be nothing like its first eight months.
What will BTCUSD bring next week? That is the subject of discussion in our next Elliott Wave PRO analysis due out late Sunday!