Note: This article was originally posted on ElliottWave.com on November 17, 2021.
Ethereum's 13% 2-Day Drop: Catch It If You Can
Experts see no "clear" fundamental reason for the crypto collapse. That's because there isn't one.
by Nico Isaac
Updated: September 30, 2022
Get out your telescopes because the evening of Tuesday November 16 kicked off a month's long astrological marvel known as the Leonids Meteor Shower.
One day earlier on November 15 and into the next day, the financial skies also displayed their own showering spectacle: namely, an across-the-board downpour of declines by the world's brightest crypto stars! Wrote the November 16 Motley Fool:
"Crypto Crash Hit Hard on Tuesday Morning... The explosion of cryptocurrency prices seems to have come to an abrupt halt late on Monday night as a broad crypto sell-off commenced."
Leading the descent was second in crypto command, Ethereum, which saw its value plunge 13% in two days, leading to "$200 million in futures liquidation." (Nov. 16 Coin Telegraph)
Reasons for the sudden crypto selloff were hard to come by via the usual mainstream sources. One November 16 Forbes took this shot in the dark:
"Hundreds Of Billions Lost As Major Cryptocurrencies--Including Bitcoin, Ethereum, Solana, Cardano--Tumble In Crypto Crash
"It's not clear why the cryptocurrency market is crashing, though there are several factors that could contribute. Chinese authorities renewed efforts to crackdown on cryptocurrency mining Tuesday, slamming the energy consumption and carbon footprint of the process."
In other words: "Several factors" which may or may not have contributed to the crypto crash, one of which -- China's hostile, anti-crypto policies -- has been ever-present since, well, the People's Bank of China prohibited banks from handling bitcoin transactions back in December of 2013!
And then there's what happened in the aftermath of the recent "metheror" shower, as described by the November 16 Coin Telegraph:
"Traders Watch for a Trend Reversal After Ethereum Price Drops to $4100."
Correct me if I'm wrong but isn't this timing backwards? The goal of traders is to catch reversals before prices tank $700 per coin in 48 hours, as was the case for Ethereum.
Is that just wishful thinking?
Not at all. It's thinking outside the fundamental box, and inside the one of Elliott wave analysis. Here, on November 14 at 8:11 PM, ET, our Crypto Pro Service posted this intraday update for Ethereum which warned of a major downside reversal ahead.
Prices were at the end of a wave 2 advance, and en route for a third wave decline:
"Anticipate price falling... from 4806.04 to below 4514.25 and into to somewhat under the 4292-4223 neighborhood, doing so in five waves.
"Price breaking 4627-4596 cluster support will argue that projected selling pressure is likely emerging down from the then existing high on day."
The next day, Ethereum took its first step down of a 2-day, 13% drop as shown in the chart below:
This story demonstrates what we've always known about mainstream financial analysis; it uses old, "fundamentals" to explain brand new price turns when no clear reason for the move is apparent.
Elliott wave analysis works the other way around; it uses clear patterns to anticipate price turns before they unfold.
Right now, our Crypto Pro Service presents labeled price charts, original analysis, and special video updates for the world's leading digital currencies.
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