- Ethereum price has been in a strong downward sell-off in the past few months.
- Ethereum developers announced a delay to the difficulty bomb.
- ETH price could crash below $1,000 in the near term.
Ethereum price crashed to the lowest level since March 2021 as investors reacted to the new merge delay and the rising fear of a recession in the United States. The ETH token is trading at $1,371, which was its lowest level since February 27th.
Ethereum merge delay
Ethereum developers have been working hard to transition the network from a proof-of-work to a proof-of-stake. The goal is to make it faster, more reliable, and cheaper to execute transactions.
Recently, however, the merge has had some major challenges. In April, the developers decided to postpone Ethereum’s merge with the Beacon chain from June to the third quarter.
And now, the developers have announced another delay for handling the “difficulty bomb”, which means that the overall transition could wait for a few more months.
Difficulty bomb is a measure that was introduced to Ethereum’s code in 2015 with the goal of forcing validators to accept the merge. It simply increases the block difficulty over time and makes it impossible for validators to mine new transactions.
Before this delay, the expectation was that the merge will happen in August this year. Therefore, some analysts believe that the process could be completed in the fourth quarter of this year.
Ethereum price also crashed as investors reacted to the rising fear of a recession after Friday’s consumer inflation data. The numbers revealed that consumer prices surged to over 8.6% in May, the highest point since 1981.
Therefore, a combination of high-interest rates, low unemployment rate, and high inflation usually leads to a recession. This explains why Bitcoin and stocks have all crashed as investors wait for the upcoming Fed interest rate hike.
ETH price is also crashing as activity in key sectors like Decentralized Finance (DeFi), Non-Fungible Tokens (NFT), and the metaverse slump.
Ethereum price prediction
The daily chart shows that the ETH price has been in a strong bearish trend. It has fallen in the past seven days straight. The coin has also moved below the important support level at $1,705, which was the lowest level this year.
Ethereum dropped below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has been in a strong bearish trend. Therefore, it seems like bears have prevailed, meaning that the coin could soon crash below $1,000.
