Ethereum price drops as fees reach $ 31, will ETH / USD drop back to $ 1k?
The annihilation of cryptocurrencies did not spare Ethereum. At the time of writing, there has been a reversal from the decline of the last two days. Nevertheless, Ethereum price remains under pressure. As such, it is likely to sink if there is no intervention from the bulls.
Still, market participants are optimistic and expect a rebound in the trend in the coming weeks despite huge losses. Precisely if there is a recovery, how prices react at $ 2k will determine how fast the uptrend is.
At the time of writing on February 24, the crypto scene is watching the development around Layer-2 as a means to intervene against abnormally high gas prices. As of February 23, the average gas rate on Ethereum was $ 31.
The unsustainably high fee, caused mostly by traders rushing out amid the free fall in prices, congested the network. Due to Ethereum's inability to scale due to its Proof of Work architecture, it was technically impossible for merchants to transact. The withdrawals were expensive.
Consequently, Binance, the company behind Binance Smart Chain (BSC), prevented customers from withdrawing their coins.
For the past few weeks, the BSC has been processing more transactions than Ethereum at a drastically lower fee rate. Subsequently, this has led people to compare the usefulness of the two networks.
BSC supporters say their solution is more robust than Ethereum and would permanently eclipse the legacy network in the coming days.
Ethereum price analysis
Ethereum prices are stable on the last day. To date, the losses are magnified, losing seven percent.
From the daily chart, the uptrend can be maintained. However, for the past two days, the bears have been in command. In particular, after yesterday's selloff, the February 21 bearish breakout was confirmed.
It is clear that prices are now trading below the 20-day moving average (the middle BB), for the first time in more than nine weeks, in a bearish breakout pattern. The level acts as an essential support level. With a high-level close of Feb. 21 below, sellers can be in control.
If there is a confirmation of the February 23 losses, the ETH / USD price may slide back to $ 1k, the 38.2 percent Fibonacci retracement level of the December 2020 and January 2021 trading range.
This depends on whether ETH bears will push prices below $ 1.5k, January 2021 highs, with relatively high trading volumes.
On the other hand, gains above Feb 23 gains with similarly high trading volumes may cement the bulls' convictions, creating a case for a $ 2k retest.
Graphic courtesy of Trading View
Disclaimer: opinions expressed are not investment advice. Do your research.
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