The VeChain (VET) price is under pressure as the cryptocurrency sell-off accelerates. VET is trading at $0.1625, which about 17% above the key support level at $0.1393. The currency has a market capitalization of more than $10 billion.
Why VeChain price has rallied
For starters, VeChain is a blockchain project that was started a few years ago in China. The developers created VeChain Thor, a blockchain project that helps companies build decentralized applications. In the past few years, some of the most prominent companies in the country like BMW and Walmart have started using the platform. At the same time, some well-known global brands like PriceWaterhouseCoopers and Salesforce started to test the platform.
This growth has been beneficial to the VeChain price. This year alone, VET has jumped by more than 742%. At its highest point this year, it was up by more than 1,400%. In the past 12 months, VeChain has jumped by more than 3,200%.
There are three reasons why VET prices have jumped in the past 12 months. First, as mentioned, more companies have adopted the network, which has pushed its gas prices higher.
Second, the actions of the Federal Reserve have helped VET and other cryptocurrencies rally. That’s because low-interest rates and an open-ended QE plan pushed investors to embrace risky assets. Finally, fear of missing out (FOMO) and social media commentators pushed the currency higher.
Why VET prices have weakened
VeChain price have dropped by more than 40% from its all-time high. This price action is mostly because of inflation and fear of more Federal Reserve tightening. Analysts believe that if crypto prices rallied during a period of Fed easing, they will reverse when tightening starts.
Indeed, the sharp decline of cryptos has coincided with the decline in high-growth tech companies like Teladoc, Tesla, Shopify, and Spotify. All these firms are down by more than 30% from YTD highs.
Analysts are torn about when the Federal Reserve will start tightening. In the past few meetings and speeches, Jerome Powell has said that the Fed may leave interest rates at the current level until 2023. This idea was shared by Mark Grant, who predicted that the Fed will start normalizing in 2023.
Similarly, Fed’s Raphael Bostic believes that this is not the time to start hiking interest rates. However, the Fed could fall under pressure as other central banks like the Bank of Canada and Bank of England start tightening.
VeChain price technical outlook
On the daily chart, we see that the VeChain price has struggled in the past few weeks. The token has declined from its all-time high of $0.2676 to the current $0.1605. We also see that its attempts to rise to its all-time high have found substantial resistance at $0.2500.
The token has managed to move below the 50-day and 25-day moving averages, which is a sign that bears are prevailing. However, this situation will be confirmed if it manages to move below the important support at $0.1400, which was the lowest level on 23rd April. Such a move will open to the possibility of further weakness.
P.S. In my last VeChain price prediction, I warned that the currency would drop by about 15%. We are almost there.