Key Takeaways:
- ETH’s price volatility has jumped from 0.071 to 0.095 in almost a week, signifying heightened volatility.
- Industry experts Tom Lee and Mark Newton expect ETH to fall between $4,075–$4,150.
- Experts predict that ETH will reach $5,100 and BTC will reach between 130-140K.
The cryptocurrency market has started showing signs of consolidating; after the entire market capitalization (cap) of the crypto industry fell from $3.94 trillion before to $3.88 trillion at the time of reporting, declining by 1.5%. However, major cryptocurrencies over the past 24 hours are showing mixed reactions, as Bitcoin (BTC) and Ethereum (ETH) reported a decline of 0.4% and 1.3% respectively, and XRP reported an increase of 0.85% over the past 24 hours according to CoinMarketCap.
BTC has stabilized around the levels of $115K; however, ETH has shown extreme volatility in the past few days and is currently trading at the levels of $4.2K at the time of reporting. According to the data from Santiment, ETH’s price volatility for 4 weeks has jumped from 0.071 on August 13th to 0.095 at present. The volatility has started to pick up, showcasing an upward trend. With the increasing volatility, we can expect bigger price swings with ETH either upwards or downwards.
Moreover, Tom Lee, a well-known Wall Street strategist who is also the chairman of the ETH’s biggest treasury firm, BitMine (BMNR) and co-founder of Fundstrat Global Advisors, recently tweeted about ETH. Lee tweeted that, sharing the image of an email from Mark Newton, who is the Managing Director and Head of Technical Strategy at Fundstrat Global Advisors, said that ETH could face a pullback between the levels of $4,075-$4,150 by midweek. Lee further emphasized that pullbacks are healthy.
ETH had an impressive rally, increasing by over 70% since the beginning of July. According to Newton, after a strong rally, it’s normal for the price to decrease slightly before continuing higher. He views this area as a good risk/reward opportunity for buyers. It is further emphasized in the tweet that ETH could potentially rise toward the levels of $5,100, forming minor new highs. This reasoning aligns with Elliott Wave Theory, which states that the price can frequently experience brief corrections amid a larger upward trend. According to Lee and Newton, such pullbacks frequently lay the groundwork for the subsequent upward momentum.
Additionally, Newton gives shares insights on BTC’s movement as well. According to him, BTC would not go below 111.9K and could potentially rise to 130K-140K.
Open Interests Decrease, What’s the Relationship with ETH?
According to the data from Santiment, the following chart highlights the direct proportional relationship between the total open interest in dollar amount, which essentially comprises ETH futures contracts and the price of ETH. Between August 16th and 17th, when the total open interest in USD increased from $20 billion to $21 billion, the price of ETH jumped from $4,424 to $4,527.
However, after August 17th, when the total open interest in USD decreased to $19 billion from $21 billion, the price of ETH decreased from $4,527 to $4,275, declining over 5.5%. This move could further suggest that market participants are taking profits or reducing exposure after ETH’s recent rally.
Conclusion
The rising volatility, followed by a decrease in the total open interest rate in USD, has led to a fall in ETH’s prices. Industry experts such as Tom Lee and Mark Newton suggest that the current pullback is healthy, and these short-term corrections typically pave the way for the next rally.
