Ethereum (ETH) Primed For Its Deadliest Fall In History

Ethereum (ETH) is in deep trouble. The head and shoulders formation that we expected to come to fruition has played out exactly as we predicted. The 4H chart for ETH/USD shows that the price has completed the head and two shoulders and is now hanging by a thread just above the 200 EMA. Soon as the price falls and closes below this level, all hell is going to break loose. However, before we get into that, let us talk about the bullish divergence on the RSI. The price has been in a steady downtrend but we can spot a bullish divergence on the RSI. This brings up the possibility that the head and shoulders pattern we see might not play out as many expect it to. In fact, it could be a false signal and the price might end up rising towards the two shoulders short term.

However, that is not enough to change the long term outlook or prevent ETH/USD from what is expected to happen. Ethereum (ETH) and the rest of the altcoin market are due for big trouble in the months ahead. As tensions rise on the global, political and economic scale, a lot of investors are moving into Gold and Silver. Some millennial investors have been keenly pushing the Bitcoin (BTC) as digital gold narrative and so far it has made quite an impact. A lot of people seem to think Bitcoin (BTC) could actually serve as digital gold during a financial or political crisis because of its limited supply and ease of storage. What they so conveniently ignore is the fact that BTC/USD does not behave like a safe haven asset in any way with its wild price swings. That aside though, cryptocurrency investors have been moving into Bitcoin (BTC) from other altcoins and we have seen Bitcoin dominance rise above 60%.

Now, Bitcoin (BTC) dominance above 60% is bad as it is for the rest of the market but just because things are bad does not mean that they cannot get worse. If we look at the monthly chart for ETH/BTC, we see a large descending triangle. The price is one or two months away at most from a sharp break out of this descending triangle. Looking at this chart, rising Bitcoin dominance and the fact that descending triangles usually break to the downside, we can see that Ethereum (ETH) might be due for its deadliest fall in history.

Early Bitcoin (BTC) developers that worked with Satoshi Nakamoto have often expressed their dismay over the thousands of altcoins that have flooded the market and as a result the original vision and mission of Bitcoin has been left far behind in investors’ greed for higher returns. While I still expect that altcoins have a future and Bitcoin is not going to be the only cryptocurrency around, I think this is the time when we will see most altcoin projects experience maximum pain. This will separate the wheat from the chaff and investors that are patient will have the opportunity to buy their favorite coins at much cheaper prices once they have bottomed out, that is if they haven’t gone bankrupt.