The cryptomarkt starts the week with hefty losses. Bitcoin (BTC) drops with almost three percent, but strikingly enough, Ethereum (ETH) gets an even harder tap. The second largest crypto coin has been diving to the lowest point since the beginning of August. Do we have to worry?
Ethereum in danger
Market commentator The Kobeissi Letter points to a hefty crash from Ethereum. After a price fall of around 11 percent, we are at the time of writing at a price of below $ 4,200. This is a worrying development, because the Altcoin is back at the same price level as on 8 August.
A crucial moment is starting for Ethereum. The level of 4,000 dollars acted as strong psychological support in December. But if ETH now dives under that, a domino effect with possibly even sharper losses threatens.
Analyst Ted warns that the Ethereum race can fall back towards $ 3,700 if the next support does not hold. That would mean an extra loss of 11.9 percent compared to the current price. Nevertheless, he emphasizes that such a correction can produce an interesting moment of buying.
Uncertainty about Fed touches ETH
Where investors were hopeful last week about a first American interest rate reduction in 2025, sentiment has since turned. An interest rate reduction by the Fed seems less certain than expected.
More and more analysts warn that the Federal Reserve can be reluctant again. This has to do with, among other things, recent statements from chairman Jerome Powell, who emphasized that the interest weapon “has not yet been stored”. That attitude puts extra pressure on risky markets such as crypto. As long as inflation remains persistent, the chance of relaxing is small. That pushes the expectations considerably.
For the time being, many traders still count on an interest rate reduction. On the Decentralized Prestiction Platform Polymarket you can see that 86 percent of the participants expect that a reduction of 25 basic points is coming. Yet 10 percent think that interest rates will remain the same for the time being.
ETF inflow stops, pressure on Ethereum is increasing
In addition to the uncertainty about the interest rate policy, more is playing. For example, the capital flows towards Crypto-ETFs clearly decrease. Where this inflow was the engine behind the price rally, the last figures show that institutional investors take back gas. Less demand from this camp increases pressure on the market.
Ethereum also has to deal with a specific challenge: big players get their ETH massively out of strike and move them to fairs. This increases the available offer and can lead to extra sales pressure. In addition, the network activity is remarkably low. The transaction costs (fees) are at the lowest point in months with 0.17 gwei, a signal that the demand for transactions and dapps is currently weak. Together with the weakening ETF inflow, this paints a picture of a market that has difficulty holding the momentum.
Source: https://newsbit.nl/ethereum-keldert-11-cruciale-steun-van-4-000-op-het-spel/
