- Ethereum price had a dramatic meltdown in 2022.
- It could make a strong turnaround in 2023.
Ethereum price started 2023 on a positive tone as investors bought the dip. ETH jumped to a high of $1,218, which was the highest level since December 27. This price is about 36% above the lowest level in 2022. In this article, I will explain what to expect in 2023.
ETH rebound is coming
Ethereum price had a difficult performance in 2022 as the stock and crypto industry imploded. After soaring to near $5,000 in November 2021, ETH/USD crashed to a low of $882 in June 2022.
There are three main reasons why ETH price plunged. First, the Federal Reserve embraced one of the most hawkish tones in history. As inflation surged, the bank hiked interest rates by 450 basis points and started its quantitative tightening policy. Stocks, bonds, and cryptocurrencies tend to underperform in a period of tight monetary policy.
Second, Ethereum plunged because of the remarkable collapses in 2022. Terra collapsed in May, leading to losses worth over $40 billion. It was followed by the implosion of Three Arrows Capital, BlockFi, Voyager Digital, and Celsius. The most prominent collapse was FTX, which happened in November.
Third, ETH/USD plunged because of the weak performance of its ecosystem. The total value locked (TVL) in its DeFi ecosystem plunged from over $150 billion to less than $50 billion. Similarly, NFT and metaverse growth imploded in 2022.
Still, there are reasons why ETH price could see a rebound in 2023. First, after being extremely hawkish in 2022, the Fed could start its pivot in 2023 since inflation is cooling. Some analysts expect that the bank will hike rates to 5.1% and then start a strategic pause.
Second, the collapse of FTX could bring clear regulations in the sector, which will boost confidence among investors. Third, we could see more action in Decentralized Finance (DeFi) after the implosion of several centralized projects. Finally, scheduled network upgrades in the ecosystem could have positive implications in the industry.
Ethereum price forecast
The daily chart shows that ETH price found a strong support at $882 in June. After that, the coin struggled to move below that level even as BTC dropped to $15,500. Still, Ethereum’s sell-off is being supported by the 25-day and 50-day moving averages.
It has also formed a descending channel shown in black and is at its middle. Therefore, Ethereum price will likely remain under pressure in Q1 of 2023 and then rebound as the Fed starts its pivot. If this happens, the next key resistance point to watch will be at $2,500.
