Ethereum price is forecasted to slide by 25% and flirt with a $1,000 barrier
|- Ethereum price action tanks massively as sticky inflation remains.
- ETH price action slips below $1,100 on the back of a stronger dollar.
- A continuation towards $1,000 is now possible, as liquidity gets squeezed out of the market.
Ethereum (ETH) price tanks massively on the back of stronger US inflation numbers, which clearly indicate that there is no end in sight for the Fed rate hike cycle. Following on from the positive surprise in the labour market last week, the inflation figures mean traders now see more and longer rate hikes in the future compared to before the data and this will mean a stronger dollar which is negative for cryptos. Risk assets are being slashed as they struggle to prosper in this macroeconomic environment, and are thus set to drop another leg lower.
ETH price set to flirt with the year low again
Ethereum price action is no different from the S&P 500, the Dow Jones Index or US bond prices: they all fall massively under the pressure of the stronger dollar. Today’s inflation numbers will mean the Fed will have to keep hiking interest rates to tame inflation, which in turn means a stronger dollar. There is even talk the Fed may undertake an even bigger 100 bps rate hike. If a perfect storm starts forming under these conditions, the risk is that ETH price could drop even beyond $1,100 and look for $1,000 quite soon.
ETH price could make a case for finding underpinnings at the monthly S1 support level at $1,100. In addition the Relative Strength Index (RSI) is nearing the oversold area further pointing to an easing up of selling pressure. But even with the RSI trading firmly in the oversold region, in cases such as these, prompted by shifts in economic data, ETH price may still see $1,100 or $1,000 by the end of the week. The pain trade is still far from over for cryptocurrency bulls, and a turnaround for this year looks impossible
ETH/USD Daily chart
Alternatively, in a more bullish take, a pop higher could happen once the dust settles after the inflation numbers and traders venture to take on some risk-on positions. Additional motivation could come from that RSI nearing the oversold area. In such a scenario, traders could expect a return back to the red descending trend line and then an approach towards $1,300.
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