Ether Prices Fell Below $3,000 Today—What’s Next?
Ether declined with many digital assets today, pushing lower after the markets reacted to the latest announcement made by The People’s Bank of China (PBOC) that it was banning virtual currencies.
The central bank specified that it had forbidden any services that offer derivatives, order matching, token issuance and derivatives involving virtual currencies, according to CNBC.
“Overseas virtual currency exchanges that use the internet to offer services to domestic residents is also considered illegal financial activity,” the financial institution said, according to text that was translated by CNBC.
The announcement specifically singled out both bitcoin and ether as being virtual currencies that do have the same status as legal tender. It described them as illegal, noting that they are not issued by monetary authorities.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Several market observers weighed in on this situation, offering their perspective on the latest news from the PBOC.
“This isn’t the first time China has banned digital assets and it won’t be the last – end of the day, the movement we saw in the markets today was less a statement on China than a statement on how many new investors there are to crypto,” said Pat White, cofounder and CEO of Bitwave.
“People who have been in crypto for a while have seen China ban crypto 10 times, and have priced this in to their mental models.”
Jesse Proudman, cofounder and CEO at crypto robo-advisor Makara, also commented, stating that many market observers will be unfazed.
“Where China is likely virtue signaling to strengthen the digital yuan’s position, the rest of the world largely acknowledges they make these statements several times a year and little to no action follows.”
In addition to offering perspectives on the PBOC’s latest moves, several experts provided technical analysis, shedding some light on ether’s crucial levels of support and resistance.
“$3000 is ultimately the key level for Ethereum, as both a psychological level and the top of the trading range where Ethereum was stuck from May until August,” said Scott Melker, a crypto investor and analyst who is the host of The Wolf Of All Streets Podcast.
“Bulls want to see this level hold as support on the weekly chart.”
Jason Lau, COO of cryptocurrency exchange Okcoin, offered a similar view, describing the $3,000 level as key resistance, since it offered crucial support before.
“ETH had a run of 40+ days above $3000 prior to this recent move and an inability to reclaim that would definitely be a blow to near term sentiment,” he added.
Further, Lau noted that the $2,700 level, near the 100-day moving average, looks like important support.
“On the downside, the 100d and 200d moving averages are converging, and a drop below both ($2700 & $2600) would open ETH to levels not seen since the summer.”
David Keller, chief market strategist at StockCharts.com, offered a similar perspective.
“The sudden drop in Ether pushed the price back down to the lows established earlier this week in the $2,700-$2,750 range,” he stated.
“With price testing this range a couple times this week, we’ve now established this range as a new support level.”
“Just before today’s drop, Ether had retested resistance around $3,100, moving briefly above to $3,150 before dropping into this morning,” noted Keller.
“We now have a clear trading range with $2,700-$2,750 on the downside, and $3,100-$3,150 on the upside.”
“One of these levels will most likely break in the coming days, and I would expect the price to continue in the direction of that breakout.”
Proudman also commented on how the digital currency’s momentum could be decided in the short-term.
“This weekend is key – if we see further consolidation and a move higher, the bull run is back on; if we drop below $2,800, we may see downward pressure to the $2,500 mark.”
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether and EOS.