Ethereum price remained under intense pressure on Wednesday as the crypto industry dealt with the FTX fallout. ETH was trading at $1,216, which was lower than this week’s high of $1,290. The price is about 13% above the lowest level this month.
Is ETH bottoming
The biggest cryptocurrency news this month has been the fallout of FTX, the second-biggest exchange in the world. Its collapse was the biggest one since 2014 when Mt.Gox went out of business, leading to millions in losses.
Ethereum and other cryptocurrencies have seen their prices crash amid rising contagion risks. Historically, the prices of most assets tend to decline when a major associated asset collapses. For example, banking stocks crashed hard in 2009 after the collapse of Lehman Brothers.
Ethereum price pulled back as demand for cryptocurrencies has waned. The number of people investing in cryptocurrencies has crashed while outflows from exchanges have grown.
The same is true with other associated industries. For example, the total value locked in Ethereum’s DeFi network has dropped from more than $150 billion in 2021 to about $40 billion. Most lending and decentralized exchanges have seen significant outflows.
The same is true for the Non-Fungible Token (NFT) industry. Recent data shows that the volume of transactions in the industry has declined. Some analysts believe that the bubble in NFTs is bursting as many investors struggle to exit.
Still, there is a silver lining in FTX’s crash. First, because of its magnitude of the clash, there will be new regulations to weed out the bad apples in the crypto industry. This is in line with how the US responded to the collapse of Lehman Brothers.
Second, for Ethereum, it could lead to more demand for decentralized exchanges (DEX). Analysts believe that DEXes like Uniswap and dYdX are safer than their centralized peers.
Ethereum price prediction
The chart below shows that the ETH price has been in a strong bearish trend in the past few days. Along the way, the coin has formed a bearish pennant pattern that 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 likelihood that Ethereum price will soon have a bearish breakout as sellers target the key support at $1,100.
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