Ethereum is showing resilience, but a key test at $1,850 lies ahead

Market overview

The crypto market capitalisation has remained close to the $2.16T level, having recovered from a dip to $2.13T at its lows during US trading on Monday and at the start of the Asian session on Tuesday. Pressure on the market came from the escalation of the conflict between the US and Iran, which triggered a risk-off reaction and a strengthening of the dollar. That said, the market dynamics are not straightforward, with no shortage of altcoins rising over the past 24 hours. Among the most popular coins, the top performers were NEAR Protocol (+5.3%), Uniswap (+2.5%) and SushiSwap (+1.8%), while Dash (-3.3%), Basic Attention Token (-2.6%) and IOTA (-2.5%) lagged. 

Bitcoin dipped below $62K but soon rebounded, trading near $62.6K at the start of active European trading. Technically, the leading cryptocurrency remains in bearish territory, facing increased selling pressure as it approaches its 50-day moving average from below, while the previous area of local highs lies approximately $3K above the current price. However, the bears also have something to prove, and they will need to push the price below $58K to confirm the downtrend's continuation.

The picture for Ethereum is slightly more optimistic, as the second-largest cryptocurrency has been trading above its 50-day MA for the fourth consecutive day, trading within the range of recent weeks’ highs. This coin has previously signalled market reversals several times, which is why we are now paying close attention to it. Confidence in a shift in sentiment will strengthen if the price consolidates above the former low around 1,850, which now acts as local resistance. If this does not happen in the near future, a very dangerous decline can be expected. 

News background

Over the past week, Bitmine purchased an additional 30,567 ETH for $36 million, bringing the total amount of Ethereum in its reserves to 5.77 million ETH. Bitmine’s reserves now exceed 4.8% of the total Ethereum supply. Bitmine’s Chairman, Tom Lee, is optimistic about Ethereum’s long-term prospects, despite the crypto winter. In his view, ETH will support the tokenisation of traditional financial assets and the growing demand for blockchain from companies developing artificial intelligence-based applications.

Strategy neither bought nor sold any Bitcoin last week. The company sold shares worth $466.7 million, increasing its dollar reserves to $3 billion. Its Bitcoin position remained unchanged at 843,775 BTC, with an average purchase price of $75.5K.

Trump’s profits from cryptocurrencies are being invested in shares and bonds, according to a report submitted by the president to the US Office of Government Ethics. The US President does not invest in Bitcoin or shares in cryptocurrency companies.

The market crash will begin with a slump in the US bond market, warns Peter Schiff, head of Euro Pacific Capital and a crypto-sceptic. Rising US Treasury yields will inevitably lead to more expensive borrowing, a stock market crash and a fall in the value of cryptocurrencies. 

Summary: Ethereum is holding up better than the market, but the key test will be whether it can consolidate above $1,850. Without this, the risk of a further decline in cryptocurrencies remains high.