Ethereum price retreated on Monday as the overall crypto sell-off accelerated following last week’s Fed interest rate decision and as China intensified its crackdown on crypto miners. ETH dropped to $1,950, the lowest it has been since May 23rd. Similarly, other top cryptocurrencies like Bitcoin, Ripple, Binance Coin, and Cardano dropped substantially. The total market capitalization of all cryptocurrencies tracked by CoinMarketCap declined by more than 4% to more than $1.35 trillion.
China mining crackdown
China has long been opposed to cryptocurrencies. Furthermore, the country has always opposed tools that ensures privacy. Last month, the country announced that it would prohibit its financial institutions from dealing with cryptocurrencies like Bitcoin and Ethereum.
And during the weekend, it was reported that the country had extended its crackdown on mining to the Sichuan region. As a result, according to Global Times, 90% of the country’s mining capacity was shut down. The expansion to Sichuan followed further crackdowns in Inner Mongolia and Yunnan region. This is notable since 65% of all Bitcoins are mined in China.
China has also added more regulations on cryptocurrencies. For example, a Baidu search of the leading cryptocurrency exchanges shows no results. As such, investors are worried that the country will continue to intensify the crackdown, which will affect demand.
Ethereum price is also falling as investors react to the relatively hawkish Federal Reserve. In a statement last week, the Federal Reserve said that it will likely start hiking interest rates in 2023. This was earlier than the previous guidance of 2024.
Further, investors expect that the Fed will soon start unwinding its quantitative easing program that has pushed its balance sheet to more than $7.9 trillion. A tightening Federal Reserve is usually bearish for Ethereum and other cryptocurrency prices. So, what next for Ethereum prices?
Ethereum price prediction
The daily chart shows that the ETH price has been under intense pressure lately. Today, the coin has dropped to $1,950, which is lower than the psychological level of $2,000. The price is slightly above the important support level of $1,730. It has also moved below the 25-day and 50-day exponential moving averags (EMA).
Also, it seems like it is forming a bearish pennant pattern. Therefore, the pair will likely keep falling as investors target the next key support level at $1730. Any moves below this support will bring the next key level to $1,500, which is about 23% below the current level.