Ethereum Surges 33% Within 4 Days, Will ETH be Able to Sustain Momentum?

ETH, the native cryptocurrency of the Ethereum blockchain network, has surged by more than 33 percent in the past 4 days, despite the expectations of investors for ETH to continue its downtrend below the $200 support level.

Since Sept. 12, the price of ETH has increased from $167 to $223, achieving a monthly peak at $227. Traders have attributed the surge in the value of ETH to the oversold conditions demonstrated by the crypto market, as shown by Williams Percent Range and a technical indicator shared by billionaire investor Mike Novogratz.

In early September, less than two weeks ago, ETH was valued at around $300. Abruptly, on Sept. 5, ETH initiated steep fall from $300 to $211, falling by 29 percent within a 24-hour period.

After a major sell-off on Sept. 5, ETH lost its momentum and continued to move towards the $200 support level.

As more traders started to short ETH on major cryptocurrency exchanges like BitMEX and Bitfinex, ETH struggled to initiate a corrective rally, further declining to the mid-$100 region, which investors did not foresee.

Within two weeks, ETH lost nearly 50 percent of its value while Bitcoin recovered relatively quickly from its 15 percent drop and rebounded to $6,300.

The downtrend of ETH throughout early September was intense and the second most valuable cryptocurrency in the market demonstrated short-term price movements that could be compared with small market cap cryptocurrencies and tokens.

The lack of volume on ETH combined with the growing volume of Tether and other stablecoins led investors to hedge the value of ETH against the US dollar, creating a domino effect across large exchanges.

The majority of investors have falsely identified the cause of the drop in ETH. Many analysts claimed that ETH dropped in September and throughout the past few months due to a sell-off of ETH initiated by ICO projects deployed on Ethereum.

In the future, if ICOs start to sell their ETH reserves on cryptocurrency exchanges, ETH could be vulnerable to another large sell-off, similar to the trend it experienced in early September.