Ethereum is experiencing its sixth consecutive down month, with a nearly 40% drop in the past month, according to Bitwise analyst Max Shannon. He warns that without positive catalysts, the cryptocurrency could slide 22% to $1,500, marking its worst streak since 2018. Despite regulatory progress and institutional interest, Ethereum remains tied to Bitcoin's movements.
Ethereum, the second-largest cryptocurrency, is on course for a potential historic decline. Max Shannon, a senior research associate at Bitwise, predicts the price could crash 22% to $1,500 if the downward trend persists into March. This would approach the seven-month slump seen from May to November 2018.
Shannon attributes Ethereum's struggles primarily to its close correlation with Bitcoin. "ETH continues to trade as a highly correlated, high-beta expression of BTC," he told DL News, noting that Ethereum amplifies Bitcoin's movements. For instance, a 10% drop in Bitcoin typically leads to a steeper fall for Ethereum. The market, he added, is fixated on price charts and ignoring positive developments, with Bitcoin driving the decline.
On the positive side, Ethereum benefits from growing regulatory clarity worldwide. Several issuers have launched US spot Ethereum exchange-traded funds, and the $300 billion stablecoin sector heavily depends on its blockchain. BlackRock CEO Larry Fink has even referenced it positively. Yet, these factors have not translated into price gains, leaving investors baffled.
A potential turning point lies in options trading. Bearish bets have eased, with a concentration of options between $2,100 and $2,400. A 10% to 20% rally to that range could force options dealers to buy Ethereum for hedging, providing upward momentum.
Shannon suggests catalysts like the passage of the Clarity Act and increased ETF purchases—exceeding 100% of new supply—could push Ethereum toward new highs. Until then, downside risks remain prominent.
