Why is Ethereum (ETH) Price Down Today?

Key Takeaways:

• Bitcoin correction swept ETH off its local top.
• Several Ethereum future ETFs launched in the US on Oct. 2.
• Interest in the Network grows.

NOIDA (CoinChapter.com)— Ethereum (ETH) prices dropped below $3,500 on June 11 ahead of mad Wednesday or June 12, the day when the FOMC plans to announce its rate decision after the release of the US inflation data.

The critical data releases likely tempered investor sentiment, prompting the downtrend. Investors are closely monitoring the upcoming U.S. Consumer Price Index (CPI) data and the Federal Reserve’s announcement.

ETH price has been trending downward over the past seven days, but the $3,500 price level seems to be the key support level. A rebound from here could help ETH price make some gains.

CPI Data and Fed Announcement Likely Why Ethereum Price Is Down Today

The May 2024 CPI data will be released at 1330 hrs UTC on June 12. Investors expect this data to reveal persistent inflation pressures. If the CPI remains unchanged or rises, it would indicate that inflation is still not under control.

Persistent inflation typically prompts the Federal Reserve to consider tightening monetary policy to curb rising prices. A higher-than-expected CPI figure could strengthen the US dollar as investors anticipate the Federal Reserve’s response.

Nearly the entire market expects the interest rates to remain the same, suggesting market participants believe the US government’s efforts to control inflation are failing.

Moreover, if the Fed signals an interest rate hike to manage inflation, it will likely result in higher returns on traditional investments. This unlikely scenario reduces the attractiveness of riskier assets like Ethereum, prompting investors to seek more stable returns.

Additionally, bond yields have been rising in anticipation of the Federal Reserve‘s potential tightening measures. Higher bond yields provide better returns for investors, leading to a shift from riskier assets to safer investments.

As bond yields rise, the opportunity cost of holding non-yielding assets like Ethereum increases, making cryptocurrencies less attractive. The confluence of these factors could be one of the reasons why Ethereum price is down today.

The market’s bearish sentiment stems from the anticipation of sustained inflation, potential interest rate hikes, and rising bond yields. In response to these economic uncertainties, investors are increasingly moving towards safer, yield-generating assets.

Technicals Also Bearish For Ethereum

Meanwhile, Ethereum’s weekly chart reveals a ‘descending channel pattern,’ which could be another reason why its price is down today.

The channel’s upper trendline resistance recently rejected ETH price’s recent rally, leading to a sharp decline. Moreover, if the downtrend continues, ETH price could likely drop to the channel’s support trendline.

The descending channel, characterized by lower highs and lower lows, is a bearish continuation pattern. Ethereum’s failure to break above the upper trendline and subsequent fall suggests that sellers are in control.

The volume profile indicates that the recent downward move is accompanied by increasing sell volume.

Technical analysis suggests the next significant support level lies around $2,680, near the channel’s bottom trendline. Dropping to the trendline support would mean a 24% drop in prices from current levels for ETH.

However, if the price breaks below this support, it could lead to further downside, potentially pushing ETH towards lower levels.