Widely followed crypto analyst Benjamin Cowen is warning that Ethereum (ETH) could correct in a big way as he believes the leading altcoin is poised to retest a long-term trend indicator before it could give birth to a new bull market.
In a new strategy session, Cowen tells his 785,000 YouTube subscribers that Ethereum has been respecting the fair-value logarithmic regression band as support since 2017.
According to the analyst, the logarithmic regression band is designed to track the fair value of an asset using “non-bubble data.”
Cowen says that in an optimistic scenario, Ethereum may retest the upper bound of the trend indicator, which he notes coincides with ETH’s bear market low at around $875.
“Now, an interesting development is that the fair value according to this fit to non-bubble data of Ethereum is at $875, but the prior low was actually at $880. So they’re essentially the same.
If Ethereum went back down to its prior low, that would get it back home. And we talked about this a year ago. I said, ‘Look guys, what I think is going to happen is we either go down to the regression band or we go sideways until it catches up.’ Now, if we were to dump now, if we were to dump to what I’ve called home before, it would actually correspond to the prior low.”
In a worst-case scenario, Cowen says that ETH could briefly trade below the logarithmic regression trendline, similar to what happened in March 2020.
“That doesn’t mean that you can’t go below that level. As you can see, we did go entirely below the entire regression band back in March 2020. And in fact, it went about 34% below the regression band during that drop.
If we were to have another drop, similar to that, like 34% below this level, that would correspond down to about a $400 Ethereum, which is why I’ve thrown that number out there in the past as a potential outcome in a worst-case scenario environment.”
Ethereum is trading for $1,736 at time of writing, a fractional increase in the last 24 hours.
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