Ethereum tanked yesterday following
the news of Binance security breach, which reportedly resulted in approximately
$6.3 billion being drained from wallets across multiple blockchains. It was the
largest cryptocurrency heist in history.
The hack raised concerns
about exchange security and potential contagion across the crypto ecosystem.
Although Binance pledged to cover customer losses, uncertainty surrounding the
stolen assets and potential liquidations weighed on sentiment.
Around $1.53 billion in
leveraged positions were liquidated over 24 hours. While the Binance hack
triggered the initial shock, leveraged positioning and cascading liquidations magnified
the losses.
Historically, cryptocurrency
selloffs triggered by exchange hacks have often been followed by a recovery,
but the economic context decided how quickly. The initial reaction tends to be
driven by panic, uncertainty and forced liquidations rather than a deterioration
in the fundamentals of cryptocurrencies.
The macro picture
is still largely bearish given inflation risks, growth concerns, risk-off
sentiment, upcoming rate hikes and geopolitical tensions. A significant
improvement in risk sentiment is likely needed to change the current trend.
Possible catalysts include a breakthrough in US-Iran negotiations and dovish
Fed comments.
ETHEREUM TECHNICAL
ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that Ethereum pulled back to retest the broken
2,360 support and eventually dropped to new lows. The sellers will likely
continue to target the 1,900 level but if we get a pullback before that, we can
expect the sellers to lean on the downward trendline, with a defined risk above
it, to keep pushing into new lows. The buyers, on the other hand, will want to
see the price breaking above the trendline to open the door for new highs and
pile in for a rally into the 3,400 resistance next.
ETHEREUM TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can
see the price broken below the minor upward trendline that was defining the
recent pullback. There’s not much we can glean from this timeframe, so we need
to zoom in to see some more details.
ETHEREUM TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we
have a minor resistance zone around the 2,280 level where the price got rejected
from several times in the past days. If the price gets there, we can expect the
sellers to step in, with a defined risk above the resistance, to keep targeting
the 1,900 level. The buyers, on the other hand, will want to see the price
breaking higher to extend the pullback into the downward trendline. The red
lines define the average daily range for today.
UPCOMING CATALYSTS
Today we
conclude the week with the US Employment Cost Index.
This article was written by Giuseppe Dellamotta at investinglive.com.
