Ethereum Price Prediction: ETH Reaches Bearish Target of $1,500 – Can It Bounce Back?

Trading volumes have skyrocketed by 561% in the past day to $44.6 billion and currently account for almost a quarter of ETH’s circulating supply.

$350M of ETH Longs Wiped

Data from CoinGlass shows that $1.2 billion worth of long positions across the crypto space have been wiped and ETH accounts for almost a third of that total as the token is currently the worst loser within the top 10.

This weekend’s sell-off has pushed Ethereum’s year-to-date losses to 55.3%, which is almost 9% more than what Solana (SOL) has lost during this same period and 33% higher than BNB’s retreat.

Meanwhile, Ethereum’s stance as the largest DeFi ecosystem by total value locked (TVL) and other metrics typically exacerbates its losses during sharp downturns like this as the token is used as collateral to back leveraged positions.

Once the price dives below certain levels, these liquidations typically accelerate the decline for ETH.

Data from DeFi Llama indicates that another 9% decline could result in nearly $70 million worth of ETH being dumped. This is not much compared to the huge volumes seen lately but it would still depress the price of the token as further supply will be unlocked.

ETH Could Bounce Back Strongly

As we anticipated in a previous ETH price prediction, a break below the $1,750 would result in a big drop for the token. Both the bearish breakout and this expected decline occurred quite rapidly during the weekend as investors panicked.

The Fear and Greed Index has dropped once again to its record low of 17, indicating that market participants are in Extreme Fear.

ETH has recovered above the $1,550 support level after the American session opened. During the Asian session, it dropped near the $1,400 level. Can ETH retest today’s session lows?

Momentum indicators are in bearish territory. The MACD’s histogram has just flashed two dark red bars, meaning that this may be only the beginning of this bearish move.

Meanwhile, the Relative Strength Index (RSI) has entered oversold levels already. This is not necessarily an indication that the sell-off is over as this is just a measure of how rapidly the price trend has changed.

Only in one of the last three instances that ETH’s RSI moved to oversold levels and recovered above 30, the price has made a lower high. That one time, the price divided by another 7.4% and then rose from around $1,500 to $4,000 in the next 6 months.

Investors should keep an eye on the daily RSI as history shows that ETH has bounced strongly after the oscillator emerged from oversold territory.

Moving to the hourly chart, the price bounced strongly from the $1,410 level but met huge selling pressure once it neared the 61.8% Fibonacci retracement level.

Short-sellers seem to be positioning themselves for another big drop. However, this could be a liquidity trap as bulls could make a strong comeback to chase stop orders up to the $1,750 support/resistance area.

Traders would be better off waiting out until the 61.8% Fibonacci is retested or even broken to avoid falling prey to what seems to be an early liquidity trap. If the market intends to resume the sell-off, a big red candle should pop up after these levels are retested.