- Ethereum price is approaching an important support level.
- There are worries about the Federal Reserve.
- Activity in NFTs and decentralized finance has slowed.
Ethereum price plunged to the lowest level in months as investors reflect on the evolving monetary policy and the upcoming merge. ETH is trading at $2,720, which is substantially lower than this week’s high of $2,967.
Fear and greed index retreats
Ethereum joined other digital currencies in a major downward trend on Friday as investors continued to worry about monetary policy. It is hovering near its lowest point in March. Similarly, Bitcoin, Ripple, and Cardano have all declined. According to CoinGecko, the total market cap of all digital coins declined to about $1.75 trillion.
The cryptocurrency sell-off has also coincided with the overall performance of the stock market. The Dow Jones declined by more than 1,000 points while the Nasdaq 100 fell by more than 600 points. The same performance happened in Europe, where the German DAX and French CAC 40 declined by more than 2%.
Meanwhile, the closely-watched Bitcoin fear and greed index has moved to the extreme fear level of 22. The CNN Money Fear and Greed index has dropped to the fear point at 23. These are signs that investors are getting fearful as volatility increases. Indeed, the CBOE volatility index has risen close to its highest level since March.
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Ethereum price has also declined as investors wait for the merge process. The merge will combine the existing platform with the Beacon chain. It was expected to go on in June this year but was delayed to the third quarter. Therefore, there is a likelihood that it will happen in August or September.
Further, ETH price has dropped as data shows that activity in the blockchain industry is slowing. For example, the total value locked (TVL) of the network has declined by more than 12% in the past 30 days. It currently stands at $107.8 billion. There are also signs that NFTs are slowing.
Ethereum price prediction
The four-hour chart shows that ETH price has been in a strong bearish trend. It is trading at $2,685, which is close to the lower side of the descending channel pattern. The coin has also moved below the 25-day and 50-day moving averages while the Relative Strength Index is nearing its oversold level.
Therefore, while the current drop looks bad, there is a likelihood that the coin will bounce back as bulls target the upper side of the channel. A move below the lower side of the channel at $2,660 will mean that there are more sellers around. As a result, it will lead to more sell-off.
