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Ethereum price isn’t even trading at half the all-time highs it once was, and it has investors, traders, and analysts alike talking about a bear market in crypto. However, with such a severe selloff, it could be enough to stave off a longer bear phase, and a rebound from current levels could send Ethereum to new highs from here.
Only time will tell how it all turns out, but for now, we’re looking back at what happened to Ethereum price in 2021, and also looking ahead at what Ethereum trading strategies to rely on in case the market does turn fully bearish instead.
Ethereum started off the year in 2021 at under $1,000 and at the peak traded for more than $4,000 per ETH. Things turned that bullish, that fast for the top altcoin by market cap. Bitcoin was also bullish and dragging up the entire crypto market, but what really sent Ethereum into overdrive was the sudden explosion in NFTs, DeFi, and other technologies tied to smart contracts
Ethereum was introduced to do a lot more than Bitcoin can do, and that shows today with how much is built on the foundational blockchain layer. That scale in the amount of tokens and projects running on Ethereum also slowed down the network and sent gas fees soaring, but it also made ETH the hottest currency around that everyone needed to spend to transact in crypto.
If a user wanted to mint an NFT, they had to spend ETH in gas fees. Most DeFi applications also heavily require ETH, and most popular stablecoins also run on Ethereum. There was a rush to create cross-chain solutions, but there is no beating Ethereum’s reach.
Hype around ETH 2.0 and staking also drove up prices. ETH residing on exchanges reached a critical low. At the high, Ethereum traded around $4,400. But in a flash the crypto market crashed, and Ethereum collapsed by 50%.
At the current low, the second ranked cryptocurrency dropped to as low as $1700 or around the 61.8% Fibonacci retracement level – an ideal zone to watch for a possible reversal.
The more than 60% crash very closely resembles the drawdown and final shakeout before the last time Ethereum ran to a new all-time high back in late 2017 into 2018. Ethereum more than tripled in value from the previous peak. A similar run higher post sell off would put each Ethereum at over $10,000 per token.
At some point, however, no matter how bullish crypto is long term, because the assets are speculative, price discovery is volatile and another bear market will ultimately result. If and when that happens, the worst thing anyone can do is HODL.
Investing is a mistake, and even buying the dip or going long can lead to a string of losses. When the bear market troughs come back, the right strategy is short trading Ethereum through CFDs. CFDs mean you don’t have to hold the underlying asset and can still short it, making profits from a crash instead of losing capital. CFDs are offered at margin trading platforms such as PrimeXBT, for example, which lets users long and short crypto, forex, commodities, and stock indices all under one roof.
Knowing exactly when things turn bearish is much more difficult to tell. Watching for a high timeframe bearish crossover of the MACD is one way to tell as technicals recently revealed. On higher time frames, such as the two week or monthly, losing the middle-Bollinger Band – a simple moving average – can also be a signal to go short and a bear market is here.
Ethereum still hasn’t lost the key level, and a future upgrade that improves scarcity could turn things back bullish sooner than later. Ethereum still hasn’t revisited the former all-time highs against Bitcoin on the ETH/BTC trading pair, which could suggest future outperformance over Bitcoin.
Ethereum has actually outperformed Bitcoin in terms of raw ROI since its inception, however, because Bitcoin has been around a lot longer it has more ROI overall to show for it. If Ethereum can keep pace, it could someday even surpass Bitcoin’s market cap. The rest of 2021 and what happens from current levels will determine if that bullish outcome is possible, or if a bear market for altcoins is ahead.
