Ethereum’s price has dumped more than 40% in the last week, and investors are wondering if below $1,000 is a good buy position.

Cryptoassets are a highly volatile unregulated investment product.

Why is Ethereum’s Price Dropping?

The entire crypto market has been in a freefall since the collapse of stablecoin TerraUSD and sister coin Luna. Terra investors panic-sold when the coin lost its dollar peg. If that didn’t frighten the market enough, more pain came when Celsius, a crypto-lending firm, announced withdrawal and transfer halts.

Celsius pulled such a move while allegedly experiencing a liquidity crisis because Bitcoin’s price dropped to new lows, reaching the levels that the market witnessed in December 2020. The market has been in extreme fear since May, which some believed was the bottom for many coin prices. Bad news snowballed in June and forced more selling pressure, taking Ethereum to the same prices we saw in January 2021.

Ethereum Technical Analysis

Some Ethereum investors might feel that there’s no end in sight to the price dump. The bad news for Ethereum is that it broke through key support when it tested its January 2018 high. At around $1,350, Ethereum’s price failed to hold and kept dipping.

ethereum support

The next support that Ethereum will have to hold if it has a chance of recovering is around $870. It seems to be heading to that level, and some investors might be wondering if that’s a good time to buy Ethereum. The good news for Ethereum is that it hasn’t had a significant retracement since it made a new all-time high (ATH) in November 2021.

Since then, the price has sharply fallen, but the crypto market has revealed that retraces follow drastic price action. When Ethereum retraces, it would be normal for it to test its new resistance at $1,360. If it manages to break through that level, further upside could be on the cards. When Ethereum crashed from its previous ATH in January 2018, it lost more than 90% of its value by March 2020, then went on a massive bull run.

What is Ethereum?

Ethereum (ETH) is a blockchain protocol launched in 2015 to provide peer-to-peer transactions without involving a third party such as a bank. ETH enables users to send and receive digital funds, and it can provide smart contract agreements.

Smart contracts enable users to enter agreements via a transparent code that no one can amend. Smart contracts automatically execute transactions when certain conditions are met. Since smart contracts operate on a decentralized network, an intermediary is unnecessary for the execution of smart contracts. ETH is available on the best cryptocurrency exchanges.

Cryptoassets are a highly volatile unregulated investment product.

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Cryptoassets are a highly volatile unregulated investment product. Your capital is at risk.