The crypto market has been crashing hard in the last 24 hours. However, Ethereum prices are dropping much harder compared to Bitcoin. Ethereum has fallen close to 8% in the last 24 hours and is trading at $1.34K. More importantly, the slide does not seem to stop yet. ETH continues dropping close to 1% in the last hour.
According to Kevin Svenson, a major crypto influencer and analyst, Ethereum has failed to hold critical support. If ETH continues to fall, it can move down to $1K.
Ethereum completed a very successful merge. Experts believe that the accomplishment of such a large-scale software upgrade is remarkable. However, ETH prices have dropping after the merge. Many experts note that the merge could be a “sell the news” event. Since the merge’s accomplishments are long-term, it can have an underwhelming response.
Experts also highlight that the merge was completed in the worst possible macroeconomic conditions. The Consumer Price Index for August highlighted worse-than-expected inflation. The Fed, which was already taking a hawkish stance, became even more hawkish. The market is also pricing in the possibility of a 100 bps interest rate hike. However, the Fed will likely continue with an expected 75 bps hike.
Elon Musk, the CEO of Tesla, believes that another major hike from the Fed will lead to deflation. Cathie Woods of Ark Investments also have the same contrarian notion of the economy. Meanwhile, the World Bank believes that the market will face a recession next year. They believe that the recession is a result of the aggressive monetary policies of major economies.
FedEx also warned about a recession as the demand slowdown accelerates.
The price of Ethereum and other cryptocurrencies will depend upon the next interest rate hike on the 21st of September. If the FOMC moves forward with another 75 bps hike, it is likely that the move will already be priced in. As a result, the markets can bounce back.
If however, the Fed goes with a hawkish 100 bps hike, it will likely lead to a strong correction.
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