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Midweek mayhem: Assessing whether Cardano, Ethereum’s collapse is surprising

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As Bitcoin slipped on the charts, it took the entire cavalry along with it. From a technical standpoint, BTC can be expected to consolidate over the next couple of weeks as altcoins supposedly take charge. However, the narrative flips fast in the crypto-industry.

In line with these corrections, we can take a look at Ethereum and Cardano to identify if the crashes were actually surprising or possibly expected.

Ethereum and Cardano – How was the curry spilled?

Source: Trading View

The market turnaround was definitely a surprise for Ethereum. Before the 9.4% drop on the charts, ETH recovered earlier in the day to record a position above the resistance of $4,238. However, the crypto-asset was unable to consolidate long as a cascade of possible liquidations led to an enormous drop-down under $4,000.

Source: Trading View

With Cardano, it might have been less surprising. Since the 3rd week of September, ADA has been consolidating between the price range of $2.30 and $2. Since 10 October, the price has hovered under the 20-moving average on the 1-day chart. Many in the market were expecting the same to be breached soon.

However, ADA breached the bearish side of the horizon, hitting a floor price of $1.81 and dropping by 15.62%.

 Over-excitement, what else?

Source: CryptoQuant

24 hours before the drop, it was observed on CryptoQuant that all exchange estimated leverage ratios for Ethereum reached a point of overheating. The same has been identified during previous corrections.

The aforementioned leveraged ratio was last recorded on 3 September when Ethereum dropped by 25%, from $4000 to $3000.

Source: Skew

Other than that, the ETH/BTC 6-month Implied Volatility also hit a 3-month high, indicating that traders are more excited for the altcoin. More volatility was expected in a bullish direction, but the narrative flipped in the short term.

For Cardano, it was more or less the same with liquidations of $20 million, its largest since 7 September’s $55 million washout.

Recovery could be immediate

While Cardano might see some strain as a lack of momentum has transpired over the month, Ethereum may bounce back immediately and soon recover its position above $4200.

However, it will be critical to analyze buying pressure over the next 48 hours. So, until then, it is safer to stay put and avoid FOMO investments.


Biraajmaan covers market trends of major cryptocurrencies. As a graduate in engineering, his interests lie in Blockchain technology. With over a year as a journalist, his articles focus on US and UK markets.
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