Ethereum price made a strong bearish breakout on Thursday as investors reflected on the latest minutes by the Federal Reserve. ETH crashed to a low of $1,820, which was the lowest level since May 12th this year.
Fed to be more restrictive
Ethereum and other cryptocurrencies came under intense pressure in the past few sessions as investors reflected on the latest Fed minutes.
On Wednesday, the minutes showed that members were increasingly more hawkish than what the market was expecting.
Before the minutes, most analysts were expecting that the Fed will deliver two 0.5% rate hikes in the upcoming two meetings. They also expected it to move to the normal 0.25% rate hikes in the next meetings.
The minutes published on Wednesday showed that the bank was actually more hawkish than that. This means that it will deliver several 0.50% hikes and then start slowing its balance sheet.
The Fed is attempting to solve the twin challenge of lowering inflation while at the same engineering a soft landing. In most cases, this is usually an extremely difficult situation.
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Ethereum price is falling since these are uncertain times for cryptocurrency traders. They have never lived through a situation when the Fed is hiking rates aggressively.
There are other challenges that are driving Ethereum prices. For one, there are still concerns about the decentralized finance industry after the Terra implosion. The total value locked (TVL) in Ethereum’s DeFi protocol has crashed to $68 billion from its all-time high of almost $175 billion.
Further, the NFT and gaming industries that helped Ethereum have all recoiled. Recent data show that NFT sales have plateaued while the number of gamers in places like Axie Infinity and Decentraland has declined. So, what next for Ethereum prices?
Ethereum price forecast
The current Ethereum price action was easy to predict. In the past few weeks, the coin has been forming a bearish flag pattern that is shown in blue. Historically, this pattern is usually a bearish sign. The coin has moved below the 25-day and 50-day exponential moving averages.
Further, Ethereum had formed an inverted cup and handle pattern, which is usually a bearish sign. It also did a break and retest pattern as it retested the lower side of the pattern. Therefore, the coin will likely do a bearish breakout as bears target the next key support at $1,500.