The most recent crash of Ethereum pushed fear among investors all over the market, especially when the second biggest cryptocurrency on the market dropped below the $1,000 threshold, while some investors believe ETH has not yet bottomed and the market should be ready for another plunge.
Daniel Cheung, co-founder of Pangea Fund, believes that July or August could be the worst months for the cryptocurrency. As the fund manager suggests, the market is currently in the “Macro trade” mode since the digital assets industry follows macro trends like inflation.
I believe that there is a massive short opportunity for $ETH at ~$1200 over the next 2 months.
We still have not seen real capitulation yet and July / August are lining up to be potentially the worst months.
Here is how I am thinking about things 🧵
— Daniel Cheung (@HighCoinviction) June 29, 2022
In the case of Ethereum, it has been trading at a 0.8 correlation to Nasdaq, which shows that the cryptocurrency almost “blindly” follows trends on traditional markets that are unlikely to recover in the next couple months, given the Fed’s increasing hawkishness and unexpectedly high inflation numbers.
Cheung also added that Ethereum is most likely going to be levered and a liquid bet on Nasdaq, meaning that investors can get exposure to the traditional market via cryptocurrency that almost replicates their movement on the market.
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Because of the high correlation to the Nasdaq, Cheung believes that Ether will follow it once markets feel the pressure of rising rates and the continuous pressure of inflation and even a possible recession.
As of now, the market is down around 30% from the recent ATH while it has lost 45% from the ATH of 2008 in an even more uncertain environment. This makes the fund co-founder believe that there is still significant room for a drop in upcoming months or after the next rate hike.
At press time, Ethereum is trading at $1,130 and losing around 1% of its value in the last 24 hours.