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Ether's Price Drops After the Constantinople Hard Fork

Ether's Price Drops After the Constantinople Hard Fork

September 20, 2022
2 minutes
minute read

The excitement over a new and improved Ethereum blockchain is still being talked about throughout the cryptocurrency world, but that hasn't stopped the value of Ether from slipping.
Since the most commercially important digital ledger implemented an upgrade to slash energy use last week, the network's native token has dropped by 10%.
The second-largest virtual coin had rallied in the lead-up to the software update known as the Merge, but that momentum has now fizzled. The coin is down some 63% this year, a bruising period for cryptocurrencies.

Cryptocurrencies and other assets are also trembling in anticipation of what is likely to be another large Federal Reserve interest rate hike on Wednesday.
The recent decline in Ether prices has triggered some technical patterns that suggest further downside risk. As of 1:10 p.m. in Tokyo, Ether was trading around $1,350, while Bitcoin was just above $19,000.

Ether prices have fallen below the second standard deviation of a regression channel drawn from its June lows, suggesting a retreat to the third standard deviation level of around $1,250. If that support fails, the next marker would be $1,000.

The price of Ether has been hovering around $1,800 for some time now, as indicated by the horizontal bars in the chart below. This has become a sort of ceiling that the token has struggled to break, and it has since dropped below the $1,340 support level. For technical analysts, this breach of support raises the risk of further price declines.

According to data from Deribit, there is a high number of outstanding Ether put and call contracts at strikes of $1,000 and $2,000 respectively for end-September expiry. This suggests that those levels define a trading range for Ether.

Meanwhile, bulls who are looking for a glimmer of hope might take solace from the so-called maximum pain point implied by the options bets. This point is where the majority of options contracts expire, and it represents the point at which the most people would be losing money.

This theory is controversial because it suggests that options writers make more money than options buyers. The argument is that an asset’s price will move toward the level where options writers make the most profit. This is the point where the greatest number of options expire as worthless for buyers. Deribit data suggests that this maximum pain point is around $1,600.

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Bryan Curtis
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Eric Ng
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