A bearish cycle like 2018 could see Ether drop to $420 in the coming weeks.

The price of Ethereum’s native token (ETH) plunged below $1,000 on June 18 as the ongoing sell-off in the cryptocurrency market continued into the weekend.

Ether hit $975, its lowest since January 2021, and lost 80% of its value from its all-time high in November 2021. The decline came amid fears of a 75 basis point rate hike by the Federal Reserve, sending both cryptocurrencies and stocks plummeting. strong bear market.

“The Fed has only just started raising rates and FYI they haven’t sold anything off their balance sheet either,” Nick, an analyst at data source Ecoinometrics, warned that “there will inevitably be more negative impact. ”

Weekly ETH/USD price chart. Source: Trade View
The Ethereum explosion continues
For the past few days, investors and traders have watched Ether’s price with dismay, fearing that a decisive drop below $1,000 would trigger forced liquidations on heavily leveraged bets. This, in turn, will put additional pressure on Ethereum.

Concerns have been raised by Babel Finance and Celsius Network, two crypto lending platforms that have suspended payouts citing market volatility.

They further intensified after Three Arrow Capital, a cryptocurrency hedge fund managing $10 billion in assets in May, failed to top up its collateral to cover sharp bets. This comes less than a month after the collapse of Terra, a $40 billion algorithmic stablecoin project.

These events coincided with a massive withdrawal of capital from the Ethereum blockchain ecosystem. Total Locked Value (TLV) will be introduced in two parts. First, Ethereum’s TVL in decentralized finance (DeFi) projects fell by $94 billion after the Terra fiasco in May, and then another $30 billion by mid-June.

The total value of Ethereum is locked into DeFi. Source: glass node
“The ongoing deleveraging is clearly painful and resembles some sort of mini financial crisis,” said CheckMate and CryptoVizArt, an analyst pair at Glassnode, a web-based analytics platform, adding:

“However, with that pain comes an opportunity to get rid of excessive leverage and allow for a healthier rebuild on the other side.”
How low can the price of ETH go?
The Fed’s hawkish policies and the ongoing DeFi market crash suggest ongoing bearish moves in the Ethereum market.

From a technical perspective, ETH’s price should regain $1,000 as psychological support, which if it collapses could make $830 the next target for the token. The same level served as resistance in February 2018, which preceded a 90% drop to around $80 in December 2018.

Weekly ETH/USD price chart. Source: Trade View
As Cointelegraph previously reported, ETH/USD could fall to $420 if Ethereum’s correction turns out to be something like the bearish cycle of 2018, when the drawdown hit over 90%.

Related: 72 of the top 100 coins down 90% or more: Here are the failed ones

Interestingly, the $420 downside target played an important role as support in April-July 2018 and resistance in August-September 2020.

Source: CoinTelegraph