Ethereum price plunged to the lowest level since October 13 as contagion risks continued in the market. ETH slipped to a low of $1,227, which was much lower than this month’s high of $1,675. It has fallen by more than 20% in the past few days alone. Other top coins like Bitcoin, FTT, and XRP also plunged.
Why is ETH plunging?
The main catalyst for the ongoing Ethereum price crash is the collapse of FTX, one of the biggest crypto exchanges in the world. In a statement on Tuesday, Binance’s CEO said that his company was doing due diligence in a bid to acquire FTX. This happened after the company suffered a bank run following a report about FTT, its native token.
The challenges started during the weekend when a report highlighted Alameda Research’s balance sheet. Most of the company’s assets were FTX Tokens (FTT). This is important since Alameda and FTX are owned by the same person. As a result, Binance started selling its FTT tokens. And on Tuesday, Nexo pulled over $100 million.
On a positive side, the collapse of FTT can be seen as being positive for Ethereum. For one, most DEX platforms like Uniswap and dYdX are all powered by Ethereum. They are open-source platforms that are highly transparent. As such, with concerns of the leading centralized exchanges, many people will now shift to decentralized ones. If this happens, Ethereum’s network will likely benefit.
Ethereum price forecast
The four-hour chart shows that ETH price formed a dangerous double-top pattern at $1,674. In price action analysis, this is one of the most accurate bearish patterns in the industry. It managed to move below its neckline at $1,505. The coin has also crashed below all moving averages while the Stochastic Oscillator moved below the oversold level.
At this stage, the outlook of Ethereum price is bearish, with the next key support level to watch being at $1,227. A move above the resistance at $1,386 will invalidate the bearish view. This view is in line with my previous Ethereum forecast for November.
