Yesterday's proposal by international banking regulators to classify Bitcoin as "the riskiest of assets" exacerbated the recent woes of the cryptocurrency market, as its integration within the wider financial framework continues to be an open question.
It was proposed that banks wanting to have cryptocurrencies exposure set aside a 1250 per cent risk weight as collateral against the massive volatility outbursts that are so common in the crypto market.
The news did not help Ethereum regain its bullish momentum in the short term. As can be seen on the 4H chart above, ETHUSD continues to consolidate below the 38.2 per cent Fibonacci retracement at 2844.95, which has turned into a major retracement level.
This persistent inability of the price action to break out above this critical threshold, exemplified by the three distinct tests of the resistance, illustrates mounting bearish pressure. This is so in spite of the fact that the market is technically ranging at present, demonstrated by the ADX indicator.
The previous downtrend took the form of a bearish 1-5 impulse wave pattern, as postulated by the Elliott Wave Theory. The temporary consolidation of the price action can therefore be perceived as a transitionary stage before it resumes falling.
The increasing bearish pressure can also be inferred from the fact that the price action remains concentrated below the three moving averages - the 50-day (in green), the 100-day MA (in blue) and the 150-day MA (in orange).
The recent reversal from the three MAs would likely lead to a test of the closest support level at 2200.00, which served as the previous swing low. If the price manages to break down below it, then the next psychological target would be the 61.8 per cent Fibonacci retracement at 1894.91.