Ethereum (ETH/USD) price recovery rally has faded in the past two days. The coin’s price has declined in the past two straight days and is trading at $2,595, which is about 7% below the highest level this week.
Why is ETH retreating?
There are three main reasons why Ethereum price has been under intense pressure in the past few days. First, there are concerns about monetary policy as most central banks have turned hawkish. Last week, the Federal Reserve hinted that it will implement about three rate hikes this year. Some analysts are now predicting that the bank will implement as many as 7 rate hikes.
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The Fed is not alone. This week, the Reserve Bank of Australia left interest rates unchanged. But in a speech, the bank’s governor did not rule out future interest rates hikes later this year.
The Bank of England raised rates by 0.25% on Thursday while analysts expect that the European Central Bank will also hike rates this year. Historically, Ethereum and other risky assets tend to underperform when central banks have a hawkish stance.
Second, there are risks about the safety of DEFI projects. The main concern this week is after Wormhole reported that hackers had stolen over $320 million worth of cryptocurrencies. Wormhole is a bridge that links Solana to Ethereum.
It is not the only concern. Earlier this week, the Wonderland price declined after it emerged that it was run by a co-founder of QuadrigaCX. Quadriga is a company whose CEO died, leading to millions of losses. Therefore, there are concerns about the safety of assets in DEFI. According to DeFi Llama, Ethereum’s DeFi platform has lost over $40 billion in total value locked in the past few days.
Ethereum price prediction
The third reason why the Ethereum price has retreated is based on technicals. Turning to the four-hour chart, we see that a classic bearish pattern emerged recently. This pattern is known as a rising wedge and is one of the most bearish patterns used by traders.
Throughout this week, the coin has been forming this pattern and its two lines have been converging. Now, the coin has moved below the lower side of the wedge pattern. Therefore, I suspect that the coin will likely keep falling as bears target the key support level at $2,165, which was the lowest level in January.
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Source: https://invezz.com/news/2022/02/03/3-reasons-why-ethereum-price-has-retreated-for-3-straight-days/