The price of Ethereum has come under heavy pressure in 2022 as investors focus on a number of factors. It is down more than 56% this year and is down 68% from the highest level in 2021. Its market cap has fallen from an all-time high of more than $600 billion to nearly $190 billion. So, is it safe to buy ETH Dips?
Why has Ethereum crashed?
There are many reasons for the rapid decline in the price of Ethereum this year. First, macro conditions around the world have changed, raising fears of a sharp recession. For example, inflation has reached decades high in most countries while the war in Ukraine continues. Historically, riskier assets tend to underperform in periods of shifting macro events.
Second, the Federal Reserve and other major central banks such as the European Central Bank (ECB) and the Bank of England (BOE) have changed their tone and made serious rate hikes. In the US, the Fed has raised several rate hikes and raised the headline rate by as much as 225 basis points. It has also indicated that it will continue to implement hiking and quantitative tightening (QT) in the coming months.
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Third, internally, Ethereum and other smart contract platforms have been under pressure as major industries struggle. For example, the total value of Ethereum locked in DeFi has dropped from $75 billion to just $32 billion. The total amount of non-fungible tokens (NFTs) traded on Ethereum also declined.
There are other reasons why the price of Ethereum will continue to decline. For example, the lack of fiscal stimulus and the collapse of Terra, Celsius and Voyager Digital had an impact on cryptocurrency prices. So, is it safe to buy Ethereum Dip?
Ethereum Price Prediction
The daily chart shows that ETH price declined to a low of $885 in June this year. This was a notable crash, considering that the coin was trading at $5,000 a few months ago. Now, the coin has staged a brief recovery and has shifted to the 50-day and 100-day moving averages.
At the same time, the Awesome Oscillator has moved slightly above the neutral point. The price is trading slightly below the 23.6% Fibonacci retracement level.
Hence, at this stage, it is too early to make a buy recommendation for the dip. Instead, traders should wait until Ethereum breaks above the two moving averages and forms a bullish trend. Furthermore, there is a possibility that the recent rally is part of a bear rally.