Ethereum has been facing significant selling pressure, plunging nearly 10% over the past week. As of now, ETH is trading at $2,366, marking a concerning 41% drop from its previous highs. With this decline, crypto market analysts are turning cautious, as the Ethereum regression model hints at the potential for a much larger crash.
Ethereum Regression Model Hints At A Major Crash
Benjamin Cowen, a popular crypto analyst, has raised alarms based on Ethereum’s log regression model. According to Cowen, whenever Ethereum breaks its support against Bitcoin, the ETH/USD pair has historically experienced drops as steep as 70%. In two previous instances—in Q4 2016 and Q4 2019—Ethereum saw such sharp declines, suggesting that a similar pattern could play out in Q4 2024. If history repeats itself, ETH could be on track for another 50% plunge, potentially dropping to levels as low as $1,200 by the end of the year.
Currently, ETH has already slipped by 41% and shows no signs of recovery as fears of further losses mount. Investors are increasingly concerned that the crypto market is entering a prolonged bearish phase, with Ethereum possibly heading towards another major correction.
“Uptober” Optimism Wanes as Analysts Turn Bearish
Despite the early optimism for an “Uptober” rally, Ethereum’s performance has fallen short of expectations. Many had hoped for a market revival, fueled by positive sentiment in anticipation of Bitcoin’s upcoming halving event. However, analysts like Cowen have warned against over-optimism, urging investors to prepare for potential downside risks.
In August, Cowen predicted a sharp drop in Ethereum’s price before the end of 2024, estimating that ETH could fall to $1,200 before bouncing back in 2025. Although some analysts dispute this outlook, citing the unique dynamics of a Bitcoin halving year, Cowen remains firm, stating that historical patterns point to a significant correction before any sustained recovery.
Geopolitical Tensions Weigh on Ethereum’s Price
Further compounding Ethereum’s woes is the broader market turmoil. Earlier this week, cryptocurrencies, including Bitcoin and Ethereum, experienced sharp sell-offs amid escalating tensions between Israel and Iran. The geopolitical uncertainty has created a risk-off sentiment in the market, with institutional investors favoring Bitcoin over Ethereum.
The lackluster flows into spot Ethereum ETFs further reflect the diminishing confidence among investors. While Ethereum-based exchange-traded funds have garnered little interest, Bitcoin ETFs have attracted more attention, underlining Ethereum’s struggle to maintain market dominance in these uncertain times.
Adding to the bearish outlook, Ethereum ICO whales—long-term holders who participated in the network’s initial coin offering (ICO)—have begun offloading their holdings. This sell-off signals a loss of confidence even among Ethereum’s early backers, raising questions about the cryptocurrency’s future trajectory.
Also Read: Vitalik Buterin Pushes for Lower Ethereum Solo Staking Requirement
Despite these negative indicators, Ethereum’s co-founder Vitalik Buterin remains focused on improving the ecosystem. In a recent proposal, Buterin suggested reducing the minimum ETH staking requirement from 32 ETH to 16 ETH. This move aims to increase accessibility for smaller investors and further decentralize the network.
While Ethereum has historically shown resilience, the current market conditions paint a challenging picture. With strong selling pressure, diminishing investor confidence, and geopolitical uncertainties, Ethereum faces a tough road ahead. Benjamin Cowen’s regression model hints at a potential 50% drop, leaving many investors wary as they brace for what could be a turbulent Q4 2024. Whether Ethereum can recover from this slump or faces a further downturn remains to be seen.
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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