Ethereum price has struggled recently. ETH is trading at $2,970, which is 32% below the all-time high of $4,388. The currency has a market cap of more than $361 billion, according to data by CoinMarketCap. Ether is not the only one. Other cryptocurrencies like Bitcoin, Ripple, Binance Coin, and Cardano have all declined.
Sea of red in crypto
Why Ether prices retreated
There are three main reasons why Ethereum prices declined today. First, in a carefully worded statement, three Chinese regulators warned the public about the volatile and speculative nature of the currencies. They said:
“Recently, cryptocurrency prices have skyrocketed and plummeted, and speculative trading of cryptocurrency has rebounded, seriously infringing on the safety of people’s property and disrupting the normal economic and financial order.”
According to Reuters, the regulators are working to curtail the industry by putting limits on financial institutions. This is a notable event since the Chinese are some of the leading traders of the currencies.
Second, there are concerns about interest rates. While Fed officials have moved to calm the market about rates, most analysts believe that the bank will ultimately start to tighten. This is as more influential individuals like Blackrock’s Rick Rieder, Janet Yellen, and Larry Summers have urged the bank to start tightening.
In a statement yesterday, Larry Summers warned the Fed for its dangerous complacency. Analysts believe that higher interest rates will have a negative impact on Ethereum prices. Like I wrote on Sunday, while this is the case, the prices will start normalizing when tightening starts.
Third, Ethereum price is falling because of fears of speculation. This week, social media have been pumping meme stocks like AMC Entertainment and GameStop. At the same time, meme currencies like Dogecoin and Shiba Inu’s market cap has surged to billions. All these are signs that the industry is seeing mania-like events.
Ethereum Price Prediction
The weekly chart does not look good for Ethereum bulls. The chart shows that the currency is in its second straight week of decline. This has seen it drop below the 23.6% Fibonacci retracement level. And today, it is approaching the 38.2% retracement at $2,792.
If the currency manages to move below this level, it means that bears have gained control and that they will start to target the 50% retracement level at $2,300. This is in line with my previous ETH price prediction.
There is a possibility that this will happen since Bitcoin has moved below the 50% retracement and is moving to $33,990.