The price of Ethereum has struggled over the past few months as investors are concerned about a number of factors. The ETH token is trading at $1,083, which is well below its all-time high of $5,000. The market cap of the coin has fallen to around $131 billion. At its peak, Ethereum was valued at over $600 billion.
DeFi, NFTs, Gaming Growth Concerns
The price of Ethereum has crashed as investors worry about rising inflation and a stronger US dollar. Data published on Wednesday showed that US inflation rose to 9.1% in June 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 prompts the Federal Reserve to adopt an extremely harsh policy. In turn, this policy greatly inflates the value of the US dollar.
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In fact, the US dollar index has risen to $108, the highest level since 2002. A stronger US dollar usually devalues the prices of other financial assets priced in the currency. Unfortunately, the Fed is expected to double that later this month by implementing an increase of 100 basis points.
The price of Ethereum has also crashed due to the ongoing performance of key sectors such as gaming, decentralized finance (DeFi), and non-fungible tokens (NFTs). In the last few months, the total value locked (tv lines) has crashed from over $250 billion in DeFi to $73 billion. Over this period, the TVL in Ethereum has fallen to around $45 billion.
The same trend has happened in the gaming industry as well. The number of active players in Ethereum platforms like Axie Infinity has dropped below 500k. Decentraland has also seen a decline in user growth.
Furthermore, the daily trading volume of non-fungible tokens (NFTs) has dropped significantly over the past few months.
Ethereum Price Prediction
The daily chart shows that the price of ETH has been declining over the past few months. Recently, the coin has formed a horizontal channel which 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, with the bearish flag, Ethereum is likely to have a strong bearish breakout soon as sellers aim for support at $888, which was the lowest level of the year.