A widely followed crypto analyst Benjamin Cowen has warned that Ethereum (ETH) may correct massively as he thinks the leading altcoin is expected to retest a long-term trend indicator before it might usher in a new bull market.
In the latest strategy session, Cowen tells his 785,000 YouTube subscribers that Ethereum seems to have been respecting the fair-value logarithmic regression band as support since 2017. Based on the analyst, the logarithmic regression band is well-designed to track the fair value of an asset utilizing ‘non-bubble data.’
Cowen insists that in an optimistic scenario, Ethereum might retest the upper bound of the trend indicator, which he says now coincides With ETH’s bear market low at about $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, Benjamin Cowen states that ETH could shortly trade below the logarithmic regression trendline, which is 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 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 $1,820 at the time of publication, a 5% increase in the past 24 hours.
