The Ethereum price held steady below the psychological level of $3,000 as the consolidation phase continued. ETH was trading at $2,930 on Tuesday, which was 28% below its highest level in September.
Ethereum and bond yields
Ethereum and other cryptocurrency prices declined on Tuesday, in part because of the rising bond yields. In the United States, the 10-year bond yield rose to 1.52% while the 30-year and 2-year yields rose to 2.072% and 0.3127%, respectively. The same trend happened in other developed countries like Germany and the UK.
The jump in bond yields is mostly because many central banks have started to set a stage for unwinding their pandemic response measures. In its decision last week, the Federal Reserve hinted that it will start hiking interest rates in 2022. Similarly, the Bank of England is expected to start hiking rates in March next year.
To some extent, hawkish central banks are usually negative for high-risk assets like cryptocurrencies and technology stocks. Indeed, the tech-heavy Nasdaq 100 index has lagged the other key indices like the Dow Jones and S&P 500.
Ethereum price is also under pressure as risks of a US government shutdown and default rise. On Monday, Senate Republicans blocked a Democratic bill that would both fund the government and raise the debt ceiling. With time running out, it means that there is a likelihood that a government shutdown will start.
The worst scenario is where the government shutdown triggers the Treasury Department to fail tp pay the country’s debt. If this happens, the total borrowing costs of the American government will rise while foreign buyers of the country’s debt will lose confidence.
Meanwhile, DeFi platforms have remained relatively resilient amid the sell-off. The total value locked in Ethereum’s DeFi platform has dropped by 1.27% in the past 24 hours to $122 billion. This TVL is slightly below the all-time high of more than $130 billion.
Ethereum price prediction
The daily chart shows that the Ethereum price has fallen under pressure in the past few weeks. It has already dropped by more than 27% from its highest level this month. Also, the coin has formed a head and shoulders pattern, which is typically a bearish signal. At the same time, it has formed what looks like a bearish pennant pattern.
Additionally, the 25-day and 50-day moving averages have made a bearish crossover pattern. Therefore, there is a likelihood that Ethereum will continue the sell-off in the near term.
