Ethereum price has dropped by more than 63% in 2022 as demand for the coin evaporated. The coin, which was trading at near $5,000 in November 2021, the coin fell to a low of $885 in June of this year. ETH was trading at $1,330, which was about 35% from the highest level in September, giving it a market cap of more than $162 billion.
Ethereum demand falling
There are two reasons why ETH price has been in a steep downward trend in the past few months. First, the coin crashed because of the ongoing monetary policy changes in most countries. For example, in the United States, the Federal Reserve has delivered several rate hikes. It has increased rates by 225 basis points this year and reduced its quantitative tightening (QT) policy.&
As a result, the prices of most assets like cryptocurrencies, commodities, bonds, and stocks have all crashed. The Dow Jones, S&P 500, and Nasdaq 100 indices dropped by more than 20% this year. At the same time, bonds have dropped sharply this year, pushing their yield to the highest levels in years. Crude oil and gold have also dropped.
Second,& Ethereum’s price retreated as the activity within its network continued falling. According to DeFi Llama, the total value locked (TVL) in its network has crashed from over $110 billion to about $30 billion. Similarly, NFT activity has been in a deep downward trend in the past few months.
Still, there are two main reasons why Ethereum is a good investment. First, after Ethereum Merge, it became possible for people to stake the coin. According to StakingRewards, ETH worth $19 billion has been staked and holders are earning about 5%. &
Second, Ethereum still has a strong market share in the blockchain industry. It has been used extensively in industries like decentralized finance (DeFi) and non-fungible tokens (NFT). This role will continue growing in the coming years.
Ethereum price prediction
The daily chart shows that Ethereum price crashed to a low of $885 in June this year. It then staged a strong comeback to $2,000 as investors waited for Ethereum Merge event. Recently, however, this bullish momentum has faded and the coin has moved below the important support level at $1,423. This was an important level since it was the lowest point on August 28.
Therefore, there is a likelihood that ETH price will continue falling as sellers target the next key support level at $1000. In the long-term, the coin will likely bounce back and retest the resistance at $3,000.
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