Ethereum price has been in a spectacular sell-off in the past few months. The ETH coin is trading at $2,378, which is about 51% below the highest level in 2021. Its total market capitalization has retreated to about $285 billion, meaning that investors have lost over $250 billion in value in the past few months.
There are several reasons why the Ethereum price has declined sharply in the past few months. First, there are fears about the hawkish Federal Reserve decision that comes on Wednesday.
Analysts believe that the Fed will embrace a more hawkish tone this week. For example, it will slash its asset purchases program for the third straight month and then start hiking interest rates.
Second, Ethereum has crashed because of the rising worries about competition. In the past few months, the number of the so-called Ethereum-killers has been in an upward trend. They include platforms like Fantom, Solana, Polkadot, and Avalanche.
Third, the decline of Ethereum is in sync with the overall performance of other assets. For example, the S&P 500 index has joined the Nasdaq 100 index into the correction zone.
As regular readers know, I have a position on Ethereum, which I believe is the most useful blockchain projects in the world. I am not selling for three main reasons.
First, I believe that fears of a hawkish Fed have been overblown. They have also been priced-in by investors. Therefore, there is a likelihood that the Ethereum price will bounce back after the fact.
Second, despite the soaring competition, Ethereum still has a strong market share that is even growing. For example, it is the most preferred platform among DeFi, metaverse, and NFT builders.
Finally, Ethereum developers are working to improve the platform through the ETH 2.0 upgrades. This transition will make the network faster and more reliable.
Ethereum price prediction
The daily chart shows that the Ethereum price has been in a strong bearish trend. A closer look shows that the coin is actually forming a death cross, which happens when the 50-day and 200-day moving average makes a crossover.
Therefore, in the near term, I suspect that the coin will continue the downward trend, with the next key support being at about $2,000. However, in the long-term, I suspect that the coin will bounce back as investors buy the dip.
