Ethereum price has struggled in the past few months as investors remain concerned about several factors. The ETH token is trading at $1,083, which is significantly lower than its all-time high of near $5,000. The coin’s market cap has dropped to about $131 billion. At its peak, Ethereum was valued at over $600 billion.
DeFi, NFT, Gaming growth concerns
Ethereum price has crashed as investors continue worrying about the rising inflation and the strong US dollar. Data published on Wednesday revealed that America’s inflation surged to 9.1% in June of this year. This was the biggest increase in more than 41 years.
Inflation has an impact on Ethereum and other cryptocurrency prices. For one, high inflation pushes the Federal Reserve to embrace an extremely hawkish policy. In return, this policy tends to push the value of the US dollar much higher.
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Indeed, the US dollar index has surged to $108, which is the highest level it has been since 2002. A strong US dollar usually devalues the prices of other financial assets that are priced in the currency. Unfortunately, Fed is expected to double down by implementing a 100 basis point rate hike later this month.
Ethereum price has also crashed because of the ongoing performance of key sectors like gaming, decentralized finance (DeFi), and non-fungible tokens (NFT). In the past few months, the total value locked (TVL) in DeFi has crashed from over $250 billion to about $73 billion. In this period, the TVL in Ethereum has dropped to about $45 billion.
The same trend has happened in the gaming industry. The number of active players in an Ethereum platform like Axie Infinity has dropped to below 500k. Decentraland has also seen waning user growth.
Further, the volume of non-fungible tokens (NFT) traded on a daily basis has declined significantly in the past few months.
Ethereum price prediction
The daily chart shows that the ETH price has been falling in the past few months. Most recently, the coin has formed a horizontal channel that is shown in blue. This channel resembles a bearish flag pattern. It has also moved below the 25-day and 50-day moving averages.
Therefore, because of the bearish flag, there is a possibility that Ethereum will soon have a strong bearish breakout as sellers target the support at $888, which was the lowest level this year.