Ethereum price continued to be under heavy pressure on Wednesday as the crypto industry faced the fallout from FTX. ETH was trading at $1,216, which was below this week’s high of $1,290. The price is about 13% above the lowest level this month.
Is ETH rock bottom
The biggest cryptocurrency news this month saw fallout from FTX, the second largest stock exchange in the world. The collapse was the biggest since 2014, when Mt.Gox went bankrupt, leading to millions of losses.
Ethereum and other cryptocurrencies have seen their prices crash amid rising contagion risks. Historically, the prices of most assets tend to fall when a major associated asset collapses. Bank shares, for example, collapsed hard in 2009 after the fall of Lehman Brothers.
The price of Ethereum retreated as demand for cryptocurrencies declined. The number of people investing in cryptocurrencies has crashed, while exchange outflows have increased.
The same goes for other related industries. For example, the total value locked into Ethereum’s DeFi network has dropped from over $150 billion in 2021 to around $40 billion. Most loans and decentralized exchanges have experienced significant outflows.
The same goes for the Non-Fungible Token (NFT) industry. Recent data shows that the number of transactions in the industry has declined. Some analysts believe the bubble in NFTs is about to burst as many investors struggle to get out.
Still, there is a silver lining to FTX’s crash. Firstly, due to the magnitude of the clash, new rules will come to weed out the bad apples in the crypto industry. This is in line with how the US reacted to the bankruptcy of Lehman Brothers.
Second, for Ethereum, it could lead to more demand for decentralized exchanges (DEX). Analysts believe that DEXs like Uniswap and dYdX are more secure than their centralized counterparts.
Ethereum price prediction
The chart below shows that ETH price has been in a strong bearish trend for the past few days. Along the way, the coin has formed a bearish pennant pattern which is shown in black. Historically, a bearish pennant pattern is usually a bearish sign. It has also moved slightly below the 25-day and 50-day moving averages.
Therefore, there is a good chance that Ethereum price will have a bearish breakout soon as sellers target key support at $1,100.
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