Ethereum Price Crash: Why is ETH Price Crashing? What can ETH holders expect?

The recent crypto market correction has pushed the Ethereum price to drop 37% in the past six days. This development comes amid recession fears.

The recent crypto market correction has pushed the Ethereum price to drop 37% in the past six days. This development comes amid recession fears. The sell-off is not localized to the cryptos and can also be seen in the stock markets.

Key Points:

- ETH price followed Bitcoin’s footsteps and has crashed 37% since July 29.

- Investors expected ETH's price to rally higher due to the spot Ether ETF approval but were caught off guard by the sudden sell-off.

- Three macroeconomic factors contributing to the sell-off are the Fed's decision to keep interest rates high, weak jobs data, and the Bank of Japan's sudden rate hike.

- On the crypto front, large Ether unstakes and transfers to centralized exchanges by Jump Trading are adding selling pressure.

- If the macroeconomic outlook improves, ETH price could bounce off the $2,190 support level. However, further sell-off pressure may push ETH price toward the $1,627 support.

Investors might have expected a bullish H2 2023 for Ethereum (ETH) after the U.S. Securities and Exchange Commission (SEC) finally approved a spot Ether exchange-traded fund (ETF) on March 11. However, the sell-off in the crypto market began in the second half of July and has pushed ETH's price down 37%.

As covered by Finbold on July 29, Bitcoin (BTC) opened the sell-off wave in the last week of July, dropping below the $40,000 level for the first time since June 2022. BTC's sell-off also influenced the price of ETH, which dropped from $2,200 to $1,880 in a few hours.

Investors might be wondering why the sell-off is occurring despite anticipation for the approval of the spot Ether ETF, which is viewed as a bullish development for the cryptocurrency. Several macroeconomic factors and crypto-specific developments might be to blame for the sell-off.

Three macroeconomic factors contributing to the sell-off

Several macroeconomic factors may be contributing to the recent sell-off in the crypto markets. Three key factors that have stood out in the past week include:

1. Sell-off in stock markets: The sell-off in the crypto markets is not isolated, as traditional markets have also experienced a sell-off in recent days. The Dow Jones Industrial Average and S&P 500 both closed lower on August 3, continuing a trend that began in the second half of July. The sell-off in the stock markets may be reflecting concerns among investors about the possibility of a recession in the U.S. economy.

2. Fed decision and jobs data: Another macroeconomic factor that may be influencing the sell-off in the crypto markets is the Federal Reserve's decision to keep interest rates high. The central bank raised its benchmark interest rate by 75 basis points for the second consecutive time in July. Moreover, recent jobs data has also been coming in weaker than expected, which could further stoke recession fears among investors.

3. Bank of Japan rate hike: In a surprising move, the Bank of Japan decided to adjust its yield curve control policy and allow long-term interest rates to rise further. The central bank has maintained ultra-low interest rates for an extended period to stimulate the economy. However, the recent adjustment may signal a shift in the Bank of Japan's strategy, which could impact global markets.

These three macroeconomic factors, combined with the recent sell-off in the stock markets, are likely putting pressure on the crypto markets and contributing to the sell-off in Ethereum price.

Crypto factor adding to sell-off pressure

In addition to the macroeconomic factors, a recent crypto development may also be adding to the sell-off pressure on the Ethereum price. According to data from crypto analytics firm IntoTheBlock, large Ether unstakes and transfers to centralized exchanges are being made by Jump Trading.

As highlighted by Finbold on August 2, large Ether unstakes have been observed recently, with one unstake valued at $46 million and another at $23 million. These large unstakes, coupled with the transfers to centralized exchanges, could be adding selling pressure on the market.

What can ETH holders expect?

From a technical standpoint, Ethereum price is retesting the $2,190 and $1,927 support levels. If the macroeconomic situation stabilizes, investors can expect a bounce here. However, if the outlook worsens, Ethereum price forecasts that ETH could drop lower and retest the $1,627 support level.

The above is the detailed content of Ethereum Price Crash: Why is ETH Price Crashing? What can ETH holders expect?. For more information, please follow other related articles on the PHP Chinese website!