• Ethereum has slowly picked up sitting at $3,111.77 
  • This is an increase after it dipped to $3,044.13
  • Industry watchers say a rebound is imminent 

Ethereum has lost more than 20% since the start of the new year, but despite the downturn, the world's number two cryptocurrency may have found vital support.

Ethereum reached a seven-day high of $3,879 on Jan. 4 before losing several hundred dollars in market value the day after. By Monday, the number two cryptocurrency in terms of market capitalization dipped to $2,939 before picking up to $3,044.13 and $3,111.77.

Interestingly, Ethereum remained strong after it was subjected to its first test since May 2021 based on the weekly chart's 50-week moving average. The crypto has held this critical support level through the past bull cycles, which many industry watchers believe, is a strong indication that a rebound is imminent.

Based on the Fibonacci retracement indicator from the crypto's low value of $1,700 to its all-time high in November of $4,870, Ethereum just needs to regain $3,300 value to attract buyers. This resistance level, if surpassed, could allow Ethereum to create adequate bullish momentum to move its value to $3,700 or higher.

But if the crypto fails to achieve the strength it requires to rebound, a break on the 50-week moving average is highly likely. If this happens, investors could panic and eventually think of another sell-off.

As a domino effect, Cryptobriefing believes this "could then crash toward the 78.6% Fibonacci retracement level or the 100-week moving average. These key areas of interest sit at $2,400 and $1,700, respectively."

The sell-off in cryptocurrencies is due to investors' concern over possible rate hikes by the Federal Reserve as soon as the first quarter of this year. "The minutes from the Fed have increased expectations that the central bank of the world’s largest economy will now move faster to raise interest rates to fight soaring inflation," deVere Group founder and CEO Nigel Green said.

"As a result, there’s been a knee-jerk sell-off on Wall Street and the crypto market as it is perceived by some traders that such a move puts at risk the liquidity that has benefitted many asset classes, including Bitcoin," the executive explained. "For people who are serious about building long-term wealth, this temporary volatility will be viewed as most other bouts of market turbulence: a buying opportunity," he said.