🔥 Has Ethereum Bottomed? A Macro Outlook

18 ก.ค. 2022

Over the last couple of days we've seen ETH and many other cryptos display a lot of strength. Yet again, this raises the question whether the bottom is in or not.

In this analysis I want to shed some light on both potential answers to the million dollar question.

Yes, the bottom is in.
As seen on the weekly chart above, ETH has yet again bounced off the massive support which goes back all the way to 2017. Furthermore, ETH's weekly RSI value has been under 30 for the second time in history. The last time the RSI was this low it signaled the bottom of the previous bear market.

Last but not least, the CPI (inflation) data from last week came out very negative, but failed to cause a sell-off. The core CPI has been falling for three months now, so inflation might have topped already. Historically, peak inflation = bottom of the bear market in assets = best time to buy.

No, the bottom is not in yet.
The macro outlook is still not great. The fact that interest rates will most likely keep on rising for the remainder of the year and the fact that the world economy will most likely enter a recession in the coming months are not making 2022 an ideal year for investments.

Furthermore, ETH has historically fallen much further during bear markets. The current ~82% decline from ATH might not be enough.

Conclusion
It's likely that we're going to get some kind of bounce going for the coming weeks. ETH (and crypto) have been selling for almost three months straight without any bounce, so it's likely we get one.

Whether this is the bottom remains to be seen. If it's not, I think we're much closer to a bottom than most think. A value between $800-$600 seems like a decent bottoming area.

On the other hand, a recession always follows market crashes. In previous crashes we bottomed far before most of the economic pain was felt.

Time will tell what is the truth. For now, enjoy the ride.