If you are something related to the crypto world, surely you have heard that expression. And it is that, currently there is talk that Ethereum (ETH) has had a “dead cat rebound”. We explain it to you.
Ethereum (ETH) has marked a strong recovery in the last 24 hours (up almost 10%), reaching $1,155.82, as American purchases thanks to July 4 have accentuated this rise.
This is why we speak of “dead cat bounce”. And it is that this expression, in a few words, synonymous with rise, rebound, a small and brief recovery of the price of an asset that was very low.
The phrase comes from the saying “Even a dead cat will bounce if it falls from a great height”, which is certainly not Spanish. It comes from the US and originated on Wall Street. it was popularly applied to situations where a small comeback can be seen during a big drop.
During the early stages of a dead cat bounce pattern, it could be mistaken for a trend reversal. Let’s not get confused because one thing has little to do with the other and can lead to suicidal investment.
In this case we are talking about a downward movement followed by a significant price pullback. Then, however, we can find a new and fast pullback, the price stops rising and the downtrend continues, breaking even previous levels and creating new lows.
And it is that, given the weakness of the cryptocurrency sector, as well as the economy in general, this rise may be quite short-lived. Although both ETH and Bitcoin have posted a slight recovery in the last 24 hours, they are still trading down 68% and 56% on the year, respectively. Therefore, any immediate market recovery is likely to be short-lived.
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