Ethereum price is bouncing back after falling to a multi-year low of $882 during the weekend. The ETH token is trading at $1,073, which is about 22% above the lowest point during the weekend. Other cryptocurrencies like Bitcoin, Cardano, and Ripple have also suffered an uneasy recovery in the past few days.
Why did ETH plummet?
There are three main reasons why Ethereum price plummeted to 2020 lows during the weekend. First, investors are concerned about the hawkish tone of key central banks like the Federal Reserve and the Swiss National Bank. The two banks decided to hike interest rates by 0.75% and 0.50%, respectively. As a result, there are concerns that this hawkish tone will lead to a recession.
According to WSJ. economists now see the possibility of a recession at 44% in the next 12 months. This is the highest level the figure has been in the past few years. The last figure the paper collected in January placed odds of a recession at 28%. Therefore, there is a likelihood that a recession will hurt key asset like cryptocurrencies and stocks.
Second, Ethereum price is falling as concerns about its use case continue. In the past few weeks, key products that use Ethereum have all plummeted. For example, the total value locked in Decentralized Finance (DeFi) has crashed while the volume of NFTs traded has dropped to the lowest level in months. Further, Ethereum has dropped as panic selling among investors continue.
Ethereum price prediction
A common question is whether Ethereum price has bottomed. A closer look at the weekly chart shows that the coin’s price dropped below the key support level at $1,421 during the weekend. This was an important level since it was the highest point in 2017.
At the same time, the coin’s 25-week and 50-week moving averages have formed a bearish crossover pattern while the MACD has moved below the neutral point. Therefore, ETH price will likely continue falling as bears target the next important level at $500. However, a move above the resistance at $1,421 will invalidate the bearish view.