The second most valuable cryptocurrency: Ethereum, recorded its worst moments in two years on Monday during the Asian session today, with the price falling so low to $1300, marking its lowest point in two years. The bulls are battling to defend this region, as there has been historically strong support for Ethereum. Investors are, however, fearful of this coin's fate should the price break below this level. But there are lower chances it might do so as the coin had rebounded forcefully from this region over the years.
What is the cause of the price crash in Ethereum?
There are two major causes of the heavy price crash in Ethereum witnessed during the Asian session today. We have highlighted them below:
Decrease in Demand caused by the recent interest rate hike
The primary cause of the price crash in Ethereum has been the US dollar interest rate hike, which pushed investors to abandon the risky assets, including Ethereum and other cryptocurrencies, to invest in the dollar. Thus, the market is in a risk-off mode when investors desert cryptocurrency for other less risky assets.
FUD caused by de-pegging of Staked Ethereum
The significant fall in Ethereum prices today has been further ignited by the FUD over the observed de-pegging of Staked Ethereum. Initially supposed to be trading at a 1:1 ratio Ethereum itself, but gradually lost this stable pegged value last week. A report released by CoinGape last Thursday remarked that the staked ETH was seen de-pegging since late Thursday and trading lower than the spot prices. This was allegedly caused by a $1.5 billion sudden sell-off by Alameda Capital - who has been one of the largest holders of the staked Ethereum. Consequently, Staked ETH prices dropped compared to the cost of Spot Ethereum and is yet to return to the current regular price. Many investors have been panic selling for fear of repeating what happened previously to the Luna coin last month.
Is Ethereum a good crypto investment?
Ethereum has been one of the most substantial cryptocurrency projects after Bitcoin, which has both proofs of work and proof of stake. Its network is so strong that it has become increasingly difficult for its smart contracts to rug pull or be manipulated. Hence, many analysts are optimistic that the price will recover again.