Ethereum (ETH), the second-largest cryptocurrency by market capitalization, has been under significant selling pressure lately. Over the past week, Ethereum’s price has dropped nearly 10%, raising concerns about its future trajectory. While some investors hoped for an “Uptober” rally, crypto analyst Benjamin Cowen warns that Ethereum might still experience a massive correction, potentially losing up to 50% of its current value. Could ETH be headed for a deeper crash?

Ethereum’s Current Decline: Losing Key Support

As of now, Ethereum is trading at $2,366, a sharp decline that has wiped out more than $50 billion from its market capitalization over the past week. This steep drop has many market participants wondering if the worst is yet to come. According to Cowen, Ethereum’s historical data suggests that the cryptocurrency could face an additional 50% correction from its current levels.

Ethereum has already lost key support against Bitcoin (ETH/BTC), which Cowen points out is a critical factor in predicting the asset’s future performance. Using a log regression model, Cowen highlights that whenever ETH breaks this support, the ETH/USD pair historically faces a dramatic drop.

Historical Patterns: What Do They Say?

Cowen’s analysis draws from Ethereum’s past performance, particularly during significant market corrections in Q4 2016 and Q4 2019. During these periods, Ethereum saw a steep 70% drop once it lost support against Bitcoin. Although ETH is already down 41% from its previous high, Cowen suggests that this could be just the beginning of a more significant downturn.

He predicts that Ethereum could fall as low as $1,200 before the end of the year, a drop of nearly 50% from current levels. This bearish forecast is based on the assumption that Ethereum will continue to follow its historical pattern of sharp declines once key supports are broken.

A Bearish End to 2024?

Cowen’s analysis has caught the attention of the crypto community, with some market participants agreeing that Ethereum could be in for a rough ride in the coming months. In August, Cowen warned his followers that Ethereum was likely to face a major drop before bouncing back in 2025. He remains consistent in this view, citing historical regression models as evidence for his prediction.

However, not everyone agrees with Cowen’s outlook. Some analysts argue that his model doesn’t fully account for the unique circumstances of 2024, particularly the fact that this is a Bitcoin halving year. The halving event, expected in April 2024, is traditionally seen as bullish for the broader cryptocurrency market, which could potentially help Ethereum avoid such a sharp decline.

Responding to these critics, Cowen stood by his prediction, stating that while the Bitcoin halving could have a positive impact on the market, it doesn’t guarantee Ethereum’s immunity from short-term corrections. He suggests that the cryptocurrency market’s volatility, combined with external factors like geopolitical tensions and waning institutional interest, could still lead to significant downside risks for Ethereum.

Market Sentiment: Optimism vs. Caution

Despite Cowen’s grim forecast, some investors remain hopeful for a turnaround. The concept of “Uptober” has been floated by several traders who believe that the fourth quarter could see a rally in crypto prices, driven by renewed interest and positive market sentiment. Ethereum, in particular, is seen as a key player in the upcoming bull run, especially with the ongoing development of Ethereum 2.0 and its transition to proof-of-stake.

However, with the global economy still facing uncertainty, coupled with rising regulatory scrutiny in key markets, the optimism around Ethereum’s price recovery might be premature. Institutional interest in ETH has also dwindled in recent months, with many large players adopting a wait-and-see approach as the cryptocurrency market navigates through turbulent waters.

What’s Next for Ethereum?

The next few months will be critical for Ethereum. If Cowen’s analysis proves correct, the cryptocurrency could be in for a sharp correction that brings its price down to $1,200 before the end of 2024. However, if market sentiment shifts and external factors like Bitcoin’s halving play a more significant role, Ethereum could recover and avoid the steep drop that some are predicting.

For now, the Ethereum community is watching the charts closely, with many investors bracing for potential volatility. Whether or not Ethereum will experience a major correction remains to be seen, but it’s clear that the asset is not out of the woods yet. Traders and investors should consider both the upside and downside risks as they make their decisions in the coming weeks.

Conclusion

While Ethereum has been a powerhouse in the cryptocurrency space, its current market performance suggests that further challenges may lie ahead. Analyst Benjamin Cowen’s prediction of a 50% price correction adds a cautious tone to the market, especially as Ethereum loses key support levels against Bitcoin. With the broader cryptocurrency market still volatile and regulatory pressures mounting, Ethereum’s next move will be closely watched by investors and analysts alike.