Ethereum price plunged to levels last seen in mid-July as contagion risks continue to shape the crypto industry. At the time of writing, the leading altcoin was at $1,114.60; down by 16.37%. Other cryptocurrencies, including BTC and XRP have also plunged in recent days.
What’s driving the market?
The FTX crisis is one of the key reasons behind the ongoing decline in Ethereum price. Seeing that FTX is one of the largest crypto exchanges worldwide, its troubles have had a major impact on the broader crypto industry.
On Tuesday, Binance highlighted its plan to purchase FTX. This comes after the crypto exchange experienced a bank run.
These challenges started at the beginning of the week after a report indicated that Alameda Ressearch’s balance sheet was largely made up of FTT, which is FTX’s native token. The importance of this report is founded on the fact that both FTX and Alameda Research are owned by Sam Bankman-Fried.
On the one hand, the collapse of FTX is a key catalyst of Ethereum price downtrend. However, it may turn out to be a positive factor for the altcoin. To begin with, Ethereum is home to Uniswap and most of the other DEX platforms. Since they are significantly transparent, the current crisis may attract more investors to decentralized exchanges. If that happens, the Ethereum network will greatly benefit.
Ethereum price prediction
As seen on its four-hour chart, Ethereum price remained below the 25 and 50-day exponential moving averages. Besides, it is in the oversold territory with an RSI of 17. Indeed, both the technicals and fundamentals point to further losses in the ensuing sessions. Indeed, the bearish formation of a double top at 1,676.18 earlier in the month pointed to the ongoing downtrend.
For as long as Ethereum price remains below the neckline at 1,501.87, the bearish thesis will remain valid. In the short term, the bulls will be striving to defend the support at 1,055.49. On the upside, a corrective rebound may have it rise to 1,217.27.