Ethereum price resumed the bearish trend during the weekend as fears of more contagion in the crypto industry continued. ETH/USD crashed to a low of 1,173, which was lower than last Friday’s dead cat bounce high of 1,347. It has crashed by more than 60% this year. Similarly, most cryptocurrencies like VIDT, BURGER, and WNXM have also plunged.
Crypto demand evaporates
Crypto fear and greed index plunged to the lowest level in months as many holders rushed to exit their positions. The main catalyst for the ongoing crash is the implosion of FTX, the second-biggest crypto exchange in the world. At its peak, the coin was valued at over $32 billion, making it bigger than Coinbase, which is now valued at just $10 billion.
In the aftermath of this collapse, demand for cryptocurrencies has evaporated. Recent data shows that outflows in Tether, the biggest stablecoin in the world, have surged to over $3 billion. Crypto holders in other countries have also decided to sell their holdings as they anticipate the worst. Therefore, Ethereum price will likely remain under pressure as more revelations emerge.
A likely future catalyst for Ethereum will be the transition from Centralized Exchanges (CEX) to Decentralized Exchanges (DEX) like Uniswap, dYdX, and Curve Finance. In the past few months, we have seen several CEX companies like Voyager Digital and Celsius crash. In the same period, most mainstream DEX companies have remained solvent.
As such, there is a likelihood that many crypto traders will move to decentralized exchanges because of their substantial safety. If this happens, Ethereum will likely benefit since it has the biggest market share in the DEX industry.
Ethereum price prediction
The four-hour chart shows that the ETH price has plunged hard in the past few weeks. It fell to a low of $1,071 last week as FTX imploded. Unlike Bitcoin, which plunged to its two-year low, Ethereum remains above its YTD low of about $800. It remains below all moving averages while the Stochastic Oscillator moved to the overbought level.
Therefore, the outlook for Ethereum price is still bearish, with the next key support level being at $1,000. A move above last Friday’s high of $1,347 will invalidate the bearish view.