Yesterday, Peter Brandt, a renowned market trader, forecasted a significant price drop for Ethereum (ETH), the second-largest cryptocurrency by market capitalization. Brandt, known for his generally pessimistic view on Ethereum, predicts the digital currency could plummet to as low as $650.
Peter Brandt is a highly experienced and respected figure in the world of trading and market analysis. With a career spanning over four decades, Brandt has established himself as an expert in the field, particularly known for his work in commodity trading. He is the founder and CEO of Factor LLC, a global trading firm that he established in 1980.
Brandt’s expertise is not limited to traditional markets; he has also become a notable commentator in the cryptocurrency space, especially with his analysis and predictions regarding Bitcoin and other major cryptocurrencies like Ethereum. He is known for his technical analysis approach, often using classical charting principles to forecast market trends and price movements.
His reputation is bolstered by his track record of accurate predictions in various markets, earning him a considerable following among traders and investors. Brandt is also an author, having written a book titled “Diary of a Professional Commodity Trader,” which offers insights into his trading philosophy and approach.
At the time of writing, Ethereum is trading at $2,225, marking a 2.7% decrease over the past 24 hours, with a market capitalization of $264 billion. Brandt’s prediction suggests a potential 71% decline from its current price, with a possible fall to $1,000 and, in a worst-case scenario, to $650.
Brandt, who recently shorted ETH, bases his prediction on classical chart patterns, which he believes are not always reliable. He pointed to a rising wedge pattern in Ethereum’s chart, suggesting that if this pattern plays out as expected, Ethereum could hit the low levels he anticipates.
A rising wedge pattern is a term from technical analysis, which is used to predict future market trends by examining historical market data, focusing on price and volume. This concept is particularly relevant in the context of stock, commodity, or cryptocurrency markets.
In technical analysis, traders and analysts often look for specific shapes or patterns in price charts, believing these patterns can indicate potential future movements. The rising wedge is one such pattern. It forms on a chart when the price of an asset, such as Ethereum, is moving upwards, but the trajectory of this increase starts to converge or come closer together. This is visualized by drawing two lines on a price chart: one line connects the increasing low points, and the other connects the increasing high points. As these lines extend over time, they converge, forming a wedge shape that points upwards.
The significance of the rising wedge pattern lies in its interpretation as a bearish (negative) indicator. It suggests that even though the price is ascending, it’s doing so with diminishing momentum and increasing uncertainty. The converging lines indicate that the highs are not increasing as robustly as before, and the lows are gradually catching up. This pattern is seen as a signal of a weakening upward trend.
A key aspect of the rising wedge pattern is the breakout, typically expected to occur after the pattern is formed. In technical analysis, a price “breakout” means that the price will exit the wedge pattern, usually in a downward direction. This leads to a potential decrease in the price of the asset.
However, it’s crucial to remember that these predictions are not foolproof and are subject to the influence of various market factors.
Contrary to Brandt’s bearish outlook, Ethereum has maintained a bullish trend this year, with an average growth rate of 80.31% in the Year-to-Date (YTD) period.
In related news, the United States Securities and Exchange Commission (SEC) has postponed its decision on several Ethereum exchange-traded funds (ETFs), with the final deadline being May 2024. This includes the Hashdex Nasdaq Ethereum ETF and the Grayscale Ethereum Futures ETF. The Hashdex Ether ETF plans to hold both spot Ether and futures contracts, while Grayscale’s Ethereum Futures ETF is viewed as a potential gateway for converting its Ethereum Trust into a spot Ethereum ETF. The SEC is seeking further public input on whether these ETFs should be listed.
Additionally, decisions on the VanEck spot Ethereum ETF and the spot Ethereum ETF by Cathie Wood’s ARK Invest and 21Shares have also been deferred. Bloomberg ETF analyst James Seyffart noted that these delays were anticipated and are part of the regulatory process, with a final decision expected by late May 2024.
Despite previously approving Ethereum futures ETFs, the SEC has yet to greenlight a spot or mixed-type Ethereum product.
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