Is Ethereum Safe to Buy as Cryptocurrencies Get Hit Again?

It’s another bumpy day in the cryptocurrency space as headlines continue to fly and as uncertainty remains high.

Ethereum is down 10.5%, while Bitcoin is off 7%. The group is suffering its worst decline since last month. Bitcoin is now testing into prior support, while Ethereum is clinging to its rising trend line.

As we’ll go over in a minute, the technicals showed signs of waning momentum. However, Tuesday’s news doesn’t seem to be helping.

Specifically, federal agents were able to seize most of the Colonial Pipeline ransom payment. Then there’s also reports out that the IRS has been asking Congress for permission to regulate cryptocurrency.

Recovering ransom money seems like a positive, even if it dents the security thesis of Bitcoin. Increased regulations should be a positive too, as it equates to more acceptance.

But it’s not the news that matters as much as the reaction, and clearly the market is having none of it right now.

Throw in the recent tweets from Tesla’s (TSLA) – Get Report Elon Musk and one can see volatility left and right.

Trading Ethereum

Daily chart of Ethereum stock.

Chart courtesy of TrendSpider.com

Ethereum is trading a little differently than Bitcoin – perhaps better – but the price action isn’t all that encouraging.

The waning momentum has been clear. Ethereum is below its 10-day, 21-day and 50-day moving averages, telling us that all of its short- and intermediate-term trends have been to the downside. Further, $2,900 continues to act as resistance.

Tuesday’s break lower shouldn’t be a surprise.

On the plus side, $2,900 is a static level of resistance vs. the lower highs that Bitcoin has been putting in during the same time. Additionally, Ethereum is still above uptrend support, while Bitcoin is now below that same measure.

In any regard, what’s next for Ethereum?

We’re seeing a solid bounce from today’s low and uptrend support. If that level is taken out, we could revisit the $2,100 support area and the 21-week moving average. Below sends Ethereum down to the $2,000 breakout area.