Ethereum price is hovering at the lowest level since July 2021 as demand for digital coins ease. The ETH token is trading at $1,804, which is significantly lower than its all-time high of almost $5,000. With its market cap currently at $218 billion, long-term holders have lost over $300 billion combined. So, is ETH about to bottom?
It is easy to understand why Ethereum’s price has crashed. The Merge expected to happen in June was postponed as the developers continued to test it. Meanwhile, from a macro level, the Federal Reserve has embraced its most hawkish stance in decades. It has already hiked interest rates by 75 basis points this year, and analysts expect to hike by another 0.50% next week.
The new normal of monetary policy is nothing like people have experienced before since the Fed is also planning to scale down its $9 trillion balance sheet. Therefore, this change of tone has scared investors, who have exited their top assets like stocks and moved to the safety of the US dollar.
Meanwhile, the recent crash of Terra’s ecosystem has not helped Ethereum and other smart contract platforms like Solana and Avalanche. Indeed, the total value locked (TVL) in Ethereum’s chain has crashed by more than half to $69 billion. As a result, DeFi holders are simply scared about losing their investments within a short period.
Ethereum price prediction
Turning to the daily chart, we see that ETH price is trading at an important support level. Looking back, we see that this price is the same level where it bottomed in 2021. At the same time, the coin has moved below the 25-day and 50-day moving averages.
At the same time, a closer look at the Mayer Multiple shows that it has dropped to 0.74. This important oscillator is defined as the ratio between price and the 200-day moving average. It is the long-term average price deviation to gauge overbought and oversold level. This means that the coin is getting oversold, which is an early sign that the bear market is capitulating, If this happens, the Ethereum price will likely move back above $2,000. But a drop below $1,600 will invalidate the bearish view.