Ethereum was down 6.88% at 6:49 a.m. UTC on Wednesday, its price was $ 1,884.98 and its trading volume was $ 17,462,593,864.
The 4-hour ETHUSD chart on the Coinbase exchange showed the presence of a descending wedge signaling a downtrend as the Ethereum price is likely to continue to decline.
The presence of three black crows (3BC) further confirmed the downtrend as buyers pull out of the market while sellers gain the upper hand.
Additionally, the MACD lines have moved down below the 0 mark, indicating a new downtrend. The two lines are also trying to separate as they move down, suggesting that the downtrend is gaining strength as current prices are falling faster than past prices.
The new downtrend has caused the price of Ethereum to fall below $ 2,000 for the first time since late June. In the past 24 hours, the world’s second largest crypto asset has fallen more than 6%.
Ethereum isn’t the only cryptocurrency affected. Other crypto assets like Bitcoin and others are facing crisis after all of them collapsed in the past 24 hours. Bitcoin fell from $ 34,601 and was trading at $ 31,894 at 7:20 a.m. UTC.
Reports show that inflation is running hot as the US dollar jumped against a basket of currencies. The latest US inflation data released yesterday shows that June inflation was much higher than expected, adding to the prospect of inflation concerns.
According to the data, US consumer prices peaked in June this year for the first time in 13 years amid supply restrictions and the economic recovery from the COVID-19 pandemic. Traders are said to be on the news for their Bitcoins and other crypto tokens sold, pointing to fears that a steady rise in inflation would cause the Federal Reserve to withdraw its quantitative easing policy.
However, some prominent crypto experts have voiced their views on the impact inflation has on cryptocurrencies like Ethereum. Konstantin Anissimov, Executive Director at CEX.IO, recently said that rising macroinflation, like Bitcoin, offers more upside opportunities for the cryptocurrency Ethereum. Constantine explained that the reduced prices of cryptocurrencies are a way for investors to buy more coins at a discount while trusting these coins to act as proper hedge against inherent inflation. Constantine therefore expects the price of ether to rise to $ 3,000 in an anti-inflation narrative.
In the meantime, the Ethereum network is suffering from technical setbacks in terms of congested bandwidth, delays in transactions, and increased fees. However, Ethereum London’s much-anticipated hard fork launch is expected on August 3rd. This is seen as a permanent solution designed to solve the bandwidth problem as Ethereum plans to switch its energy-intensive proof-of-work to a cheaper and faster proof-of-stake protocol.
An improvement protocol known as “EIP-1559” is set to introduce a new fee structure to make the Ethereum cryptocurrency less inflationary. The protocol also recommends burning many of the fees accumulated in ether to create deflationary pressure on the crypto. The upgrade also involves reducing a significant amount of the Ether supply to make it more scarce, just like it did with Bitcoin.
The descending triangle pattern signals that ether is likely to trade at a much lower level as it seeks to find a new lower support zone at $ 1700. The bear market thesis can become invalid if buyers find confidence in the market and prices skyrocket.
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