Ethereum (ETH) fell below $1,000 on June 18 as the crypto market’s ongoing sell-off continued, despite the weekend.
By November 2021, the price of Ether had fallen by 80% from its all-time high in November of that year, to $975, its lowest point since January 2021. In the wake of the Federal Reserve’s rate hike of 75 basis points, which sent cryptocurrencies and stocks into steep declines, the market fell.
According to Ecoinometrics’ Nick, an analyst, the Federal Reserve has barely begun raising rates and, for the record, hasn’t sold anything on its balance sheet either. Nick warns that more downside is almost certainly on the way.
Fearing a decisive breakdown below $1,000, investors and traders have been keeping a close eye on Ether’s price in recent days, fearing that massively leveraged bets would have to be liquidated. As a result, Ethereum would be under even more downside pressure.
Fears have been stoked by Babel Finance and Celsius Network, two crypto lending platforms that halted withdrawals because of market volatility.
A crypto hedge fund managing $10 billion in assets as of May, Three Arrow Capital, failed to provide collateral to cover its pungent bets. Earlier this year, the $40 billion “algorithmic stablecoin” project Terra went bankrupt.
As a result of these events, Ethereum’s blockchain ecosystem has seen a massive withdrawal of capital. Second, the TLV unwind was split into two stages. After the Terra fiasco in May, Ethereum’s total circulating value (TVL) dropped by $94 billion, and then another $30 billion by the middle of June.
ETH’s price must regain $1,000 as its psychological support, which, if broken to the downside, could lead the token to target $830. In February 2018, the same level served as resistance, which led to a 90% decline to around $80 in December 2018.
A bear cycle like Ether’s 2018 bear cycle that saw its price decline by over 90% may cause the USD/ETH pair to drop as low as $420, as previously reported by Cointelegraph.
02 Feb 2023
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