Ethereum, the world’s second-largest cryptocurrency, is under significant selling pressure, with its price plummeting by 10% over the past week. Trading below $2,400, Ethereum’s market cap has shrunk by over $50 billion. Analysts are now warning that the worst might be yet to come, predicting another potential 50% drop based on a widely used log regression model.
Ethereum’s Regression Model Signals Trouble Ahead
According to popular crypto analyst Benjamin Cowen, the log regression model has historically predicted major price crashes for Ethereum when it loses support against Bitcoin. Whenever this occurs, the ETH/USD pair has faced drops of up to 70%, which could mean a price target near $1,200 if the pattern repeats. Cowen notes that Ethereum is already down 41% from its recent high, heightening concerns that a similar scenario could unfold.
Ethereum has experienced similar steep declines before, notably in Q4 of both 2016 and 2019. With Q4 2024 now in full swing, the possibility of another sharp downturn looms large. Cowen’s analysis suggests that Ethereum might experience a significant drop before the end of the year, potentially falling by another 50% from its current levels.
Divided Opinions: Is Another Crash Imminent?
While Cowen’s analysis has sparked concerns, not all market analysts agree with his bearish outlook. Some argue that 2024 is a unique year due to the upcoming Bitcoin halving, which traditionally boosts market sentiment across the cryptocurrency space. These analysts believe the Bitcoin halving event could help prop up Ethereum’s price rather than push it down further.
However, Cowen remains firm in his prediction, citing historical data to support his case. In August, he warned that Ethereum could crash to as low as $1,200 before rebounding in 2025. This stark prediction has caused unease among traders and investors who had been hopeful for an ‘Uptober’ rally.
ETH Price Plummets Amid Broader Market Uncertainty
The recent drop in Ethereum’s price hasn’t occurred in isolation. This week, the entire cryptocurrency market, including Bitcoin, took a hit amid escalating geopolitical tensions between Israel and Iran. The anticipated ‘Uptober’ rally that many had hoped for has failed to materialize, leading to a broader sense of uncertainty.
Adding to the bearish sentiment is the behavior of early Ethereum investors, known as ICO whales, who have been offloading their ETH holdings. This indicates a growing lack of confidence in Ethereum’s near-term prospects among long-term holders. Institutional investors, too, appear cautious, as flows into spot Ethereum ETFs have remained tepid. Many institutional players seem to be favoring Bitcoin over Ethereum amid the current market turbulence.
Also Read: Ethereum Whale Dumps 19,000 ETH Worth $47.5M Amid 10% Price Plunge
Despite the market turmoil, Ethereum co-founder Vitalik Buterin remains focused on long-term improvements to the Ethereum ecosystem. Recently, Buterin proposed reducing the minimum ETH staking requirement from 32 ETH to 16 ETH in a move designed to make staking more accessible. This development aims to encourage more participation in Ethereum’s proof-of-stake network, even as the asset’s price remains volatile.
Ethereum’s recent price action has raised alarm bells across the market, with some analysts predicting further drops based on the log regression model. Although many had hoped for a bullish run, geopolitical tensions and broader market uncertainties have dampened optimism. While opinions on Ethereum’s future are divided, the possibility of a significant crash cannot be ignored, making it a crucial time for investors to stay informed and cautious.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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