Ethereum price is having a hard time. ETH is trading at $1,897, which is about 56% below its highest point this year. It is also slightly above the important support at $1,700 which was the lowest point in June. This price action brings its total market cap to more than $221 billion according to data compiled by CoinMarketCap.
Why Ethereum price dropped
Ethereum weakness is mostly because of the broader sell-off in crypto prices after the relatively strong US inflation data. The numbers showed that the headline CPI rose by 5.4% in June after rising by 5.0% in the previous month. Core CPI also rose by 4.2%.
These numbers are important for cryptocurrencies since they signal that the Federal Reserve could be forced to intervene. Indeed, minutes published last week showed that some Fed policymakers have started talking about tapering of asset purchases. This, in turn, will be negative for risky assets like Ethereum and other cryptocurrencies.
Ether price is also retreating because of the ongoing DeFi crash. As you may know, DeFi is a leading platform that helps decentralize the financial market. And, most of these applications are built on Ethereum’s blockchain. Therefore, its performance tends to have a correlation on Ether prices. The total value locked in the system has dropped to $56 billion from the weekly high of more than $61 billion.
Meanwhile, on-chain data show that Ethereum price is under pressure. For one, the network growth has slowed dramatically. Also, the number and volume of large transactions has declined while bears are winning the bear vs bull battle, as shown below.
Ethereum price prediction
The daily chart shows that the ETH price has been under intense pressure lately. That has seen it remain below the descending resistance level that is shown in blue. At the same time, Ethereum has found a strong support at the $1,702 level, where it struggled to move below in May and June. The coin has also crashed below the 200-day moving average.
Therefore, a move below the important support at $1,702 will mean that bears have prevailed. As a result, the next reference point will be at $1,500. A move below this level will see it fall to the next reference at $1,000, which is about 47% below the current level. On the flip side, a move above $2,500 will invalidate the bearish view.
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