Crypto meltdown sends ether tumbling 44% as it tests a key technical support level

• A meltdown in cryptocurrencies sent ether tumbling as much as 44% on Wednesday.
• The cryptocurrency staged a parabolic run in early May, but is now closing in on a key technical support level.
• Investors should look for ether to test the $2,038 support level, according to Fairlead Strategies.
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A meltdown in cryptocurrencies sent ether tumbling as much as 44% on Wednesday, with the cryptocurrency falling to its lowest levels since March.

The cryptocurrency, which is a popular medium of exchange for NFTs, is now down roughly 60% from its recent record-high of $4,380. That's in stark contrast from its parabolic run in late April and early May, in which it more than doubled in a few short weeks.

Ether's not the only cryptocurrency that is down big in recent days. Bitcoin has fallen more than 30% since Monday, with much of the weakness stemming from Elon Musk's weekend tweets and China reiterating a warning against the speculative asset class.

But bullish investors could see some reprieve as ether tests a key technical support level, according to technical analyst Katie Stockton of Fairlead Strategies.

"The magnitude of [ether's] pullback shows the risk inherent to parabolic rallies, during which support levels are left well behind," Stockton explained in a Tuesday note. Ether's support level now stands around $2,038, according to Stockton.

Ether briefly dipped below that level early Wednesday morning, falling to a low of $1,919. It has since bounced higher above the key support level, and is trading at $2,375 as of publication.

"We expect the pullback [in ether] to deepen in the near term, after which a consolidation phase may keep hold for a month or two within the context of the long-term uptrend," Stockton said.

As traders look to buy the dip in cryptocurrencies, keeping an eye on ether's key technical support level outlined by Stockton could prove to be a helpful guide.

Read more: The founders of a crypto-asset hedge fund break down how ether could overtake bitcoin in market cap - and why the second-largest cryptocurrency will go over at least $25,000 in the short- to medium-term