Ethereum Falling Back to US$1,800 in January is Inevitable

Since Ethereum reached an all-time high of US$4,800 in November, it is facing back-to-back hits

Although Ethereum is still the second-largest cryptocurrency by market capitalization, its stance in the sphere is slowly subsiding by other emerging digital tokens. ETH is also going through a bullish period. Experts predict that its value could fall to as low as US$1,800 before the end of January. Already, Ethereum's price broke through its long stood resistance of US$3,000 this month. Since it reached an all-time high in November, the digital token is facing back-to-back hits.

It is not just Ethereum that is going through a gloomy period. Even its competitor Bitcoin is undergoing a slump since it reached a record high price last year. Cryptocurrency investors thought that 2022 would be a year of developments and new price highs. However, it deceived them dramatically since the very first day. Even 2021 didn't end on a good note. The cryptocurrency market skipped the Santa Claus rally and concluded 2021 on a negative phase. Currently, Etheruem's price is swinging between US$2,200 and US$3,000. These major drops come amid the increasing inflation and Federal Reserve's initiative to increase the interest rates. Although the Ethereum platform has many advanced features like Decentralized Applications, smart contracts, and NFTs in the bag, its market value is what drives the adoption drastically. If the same scenario continues, ETH could drop below US$1,800 before the end of the month.

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Reasons Why Ethereum is Falling

Fed's Interest Rate Increase and Omicron

According to a report by the US Labour Department, the inflation in the country is at 7%, which is higher than its been in 39 years. This has made the government authorities realize the intensity of the situation. Therefore, they are planning to pull back on the pandemic economic stimulus measures while increasing the interest rates. The major motto behind this move is to make people not fall for cryptocurrencies and choose safer investment models.

On the other hand, the Omicron cases are also increasing across the globe. When the Cpvid-19 first emerged and people faced economic slowdowns, they chose to invest their money in a stable medium to combat volatility. Similarly, even cryptocurrency investors are pulling back their investments to try on less-risky assets.

Etheruem is Not Stopping at the Wedge

Etheruem has been breaking its wedge point since the beginning of 2022. It has broken the 'rising wedge', a bearish reversal pattern that emerges when price trends upward inside a range defined by two ascending, but converging trend lines. If the downward trend follows and ETH keeps up going down the wedge, then it will record more losses over the next few months.

ETH Facing the Wind of the Whole Crypto Market

Ethereum is not the only cryptocurrency that is going through a slump recently. Literally, every cryptocurrency in the market is facing some kind of price loss since the beginning of 2022. Maybe, Bitcoin's bullish rally could have acted as a trigger to push the whole sphere into trouble. Bitcoin has lost over 40% in the past three months while Cardano has lost over 50%. On the other hand, traders also sold off their coins in the name of 'liquidation' since they didn't have enough to support their position.

Although some opted for margin trading, others feared that they might lose their potential investment. This fear has pushed them to sell off their Ethereum investments. Especially, investors who didn't have collateral to support their loss sold their virtual assets before it is too late. In a nutshell, ETH is facing massive selling pressure happening elsewhere in the cryptocurrency market.

Other Altcoins are Taking Center Stage

Ethereum was the first altcoin that emerged as a direct competitor to Bitcoin. On many grounds, ETH is far better than BTC and its ancient features. It is also the first platform to feature many applications and projects on decentralized applications, NFTs, and smart contracts. One thing that limps the Etheruem platform is its high transaction fees and bad speed. On the other hand, the recently debuting crypto platforms come with better speed and agility. They also charge very little for tradings. Therefore, investors choose to opt for those over ETH.

Ethereum Broke Through US$2,200 and it is Serious

Ethereum was having a stronghold on US$2,200 for the past few weeks before it fell through the price this Monday. The price level is serious because it stood as a silver support line for cryptocurrency. Experts have already signaled a red flag saying that if Etheruem's price falls below US$2,100, then it will be hard to stop its bull run. It will further push the digital token to a sell-off phase in which nobody can predict the final outcome.