There is a likelihood that Ethereum will continue falling as bears attempt to retest last week’s low of $1,705.
- Sell the ETH/USD and set a take-profit at 1,800.
- Add a stop-loss at 2,300.
- Timeline: 2 days.
- Set a buy-stop at 2,250 and a take-profit at 2,400.
- Add a stop-loss at 1,900.
Ethereum price has been in a consolidation mode in the past few days as investors reflect on last week’s crash of Terra and the extremely hawkish statement by Jerome Powell. The ETH/USD pair is trading at 2,035, where it has been in the past few days. This price is about 20% above the lowest level last week.
Ethereum Recovery Stalls
Ethereum price has been in a strong bearish trend in the past few months. It has declined by more than 58% from its highest level in November last year.
The main catalyst for the sell-off has been the sudden change of tone by the Federal Reserve. After spending most of 2021 talking about transitory inflation, the Fed has changed its tone. It has already hiked interest rates by 0.75% in the past two meetings.
The bank has also signaled that the hawkish tone will continue. In a statement at a summit by the Wall Street Journal, Jerome Powell repeated his previous statement that fighting inflation will cause some pain in the market. Analysts now expect that the bank will hike interest rates by 0.50% in the next meetings and then switch to 0.25% hikes for the rest of the year.
As such, these are unprecedented times for both cryptocurrencies and other financial assets like stocks. That’s because the Fed has not been this hawkish in years.
The collapse of Terra has also had an impact on the recent performance of Ethereum price. Many investors have pulled out their resources from many DeFi platforms built using Ethereum’s platform after realizing that they could lose everything. According to DeFi Llama, the total value locked in Ethereum’s network has dropped by more than 38% in the past 30 days. It stands at $71 billion.
Ethereum Price Prediction
Turning to the daily chart, the ETH/USD pair made a strong bearish trend in the past few days. The sell-off accelerated when the coin managed to move below the support at 2,162, which was the lowest level on January 24th. After falling sharply last week, the coin has formed a break and retest pattern, which is usually a sign of continuation. It has moved below the 25-day moving average.
Therefore, there is a likelihood that Ethereum will continue falling as bears attempt to retest last week’s low of $1,705. A move above the resistance at $2,170 will invalidate the bearish view.