Due to a number of causes, the price of Ether (ETH), the second-most valued cryptocurrency by market capitalization behind Bitcoin, has dropped significantly. The price of ETH fell by roughly 6.0% on Wednesday as a result of rising US bond rates, worries about UK inflation, and a hasty sale of long holdings. Price forecasts for the token, notwithstanding this fall, are bullish.
Due to the Wednesday decline in the price of ETH, there was a dramatic increase in the liquidations of leveraged long ETH futures contracts. The number of positions liquidated reached its highest level since March 8th, totaling close to $45 million. Uncertainty over US regulatory prospects has been noted by several observers as one reason for the decline in the price of ETH.
Concerns concerning the regulation of ETH have also been raised as a result of SEC Chairman Gary Gensler’s recent testimony before Congress. Despite the SEC having previously initiated enforcement action against US-based crypto businesses based on the belief that it is a security, Gensler resisted providing a categorical response when asked if he believes ETH to be a security or not. Investors in ETH and other comparable cryptocurrencies are on edge over potential enforcement action that may be coming in the next months as a result of the SEC chairman’s lack of clarification.
Despite these worries, several technical factors might help the cryptocurrency rise, such as support that has persisted since ETH’s strong rallies from the 200DMA and the “golden cross” in early February. The early April highs, the 21-Day Moving Average, and an uptrend from the late-March lows converge here, and this region provides crucial short-term support for ether. A comeback from this level would be a clear affirmation of the market’s short-term bullish momentum and might trigger a quick rally back to yearly highs in the mid-$2,100 range and perhaps even farther, into the next significant resistance region just around $2,300.
Assuming that the macroeconomic environment doesn’t deteriorate too much, ETH’s trading bias is likely to remain to the upside in the medium to long term due to the post-Ethereum blockchain upgrade optimism and the ongoing dual deflationary tailwinds of more ETH moving into the staking contract and continuously being burned.
