The second-largest crypto asset by market cap faces bearish momentum ahead of its much-anticipated upgrade, according to a new report by Bloomberg.
The report says that based on technical analysis, Ethereum (ETH) could fall by over 30% from its current levels ahead of its transition from a proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) one.
The upgrade, referred to as “The Merge,” is slated to happen sometime in mid-September.
“Ether may drop to $1,000 for the first time in two months, with volatile price swings in the second-largest cryptocurrency ahead of its much-anticipated Merge upgrade.
Technical indicators on momentum and price trends show that the token’s tumble from a peak of about $2,000 in mid-August to the current zone near $1,500 is likely to continue.”
The leading smart contract platform is changing hands for $1,525 at the time of writing, down by slightly over 20% during the past two weeks.
Co-founder of independent research provider Fairlead Strategies Katie Stockton told Bloomberg that technical indicators, such as moving averages and the stochastic oscillator, are all signaling a bearish outlook for Ethereum.
“Ether has broken down below initial support from its 50-day moving average, increasing downside risk with short-term momentum now negative. The weekly stochastics have a downturn for the first time since April [suggesting a retest of support at about $1000 is likely] in the coming days.”
The stochastic oscillator is a momentum indicator that compares a specific closing price of a security to a range of its prices over a certain period of time.
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