Ether started going down following Bitcoin selloff, once South Korea claimed its intention to restrict cryptocurrency trading conditions in the country. This caused a turmoil in the market, which put Bitcoin under heavy pressure. As the result, the overbought currency started falling and led to other cryptocurrencies selloff.
Later, South Korean government clarified it was just about reinforcing market regulation in order to prevent money laundering and unauthorized mining, which spoils the cryptocurrency sector reputation. However, this was too late, as the selloff had already begun.
This is yet another confirmation of the fact that cryptocurrency market is now at the stage of forming trading conditions and reputation risks. Before that, China put some mining restrictions and reinforced regulation, while now the government intends to limit or even suspend access to centralized cryptocurrency trading platforms.
Those who were not ready to such sentiment swings left the cryptocurrency market. These are investors who bought BTC for $15,000 or $18,000 and ETH for $1,200 or $1,400, being sure that the price will be continuously rising. The profit takers, following these investors, decided to lock in their profits after the long uptrend phase. As a result, Bitcoin lost over 50% during the selloff, and Ether is trading 45% lower.
This is what you’ve got to pay for extreme volatility and risk. As cryptocurrencies are not backed by anything except the market confidence, such sentiment swings can be huge, sending the currency both up and down.
Technically, ETH is in the negative, too. After $1,000 had been broken out, the short term trend became totally descending on H4. Ether is trading at around $988 Thursday, Jan 18. D1 charts are showing that the price is likely to reach the half-way support at $655, which, in case broken out, may activate the worst scenario to send the price towards $500.
Odds are high that the downtrend is going to continue, although the first important range to watch is between $850 and $950, which is unlikely to be surpassed by the sellers from the first attempt. If this range is not broken out, Ether will get a change to recover by bouncing up above $1,000.