How Much Could Ethereum (ETH) Price Drop Amid the Crash?

Ethereum: Interestingly, Ethereum price has not regained its all-time high against Bitcoin (BTC) since June 2017 despite the NFT craze. As we reported on, Ethereum price has declined by more than 35 percent against Bitcoin (BTC) since December 2021 and has the potential to drop further in the coming months. The bullish trends of the ETH/BTC pair typically point to an increased risk appetite among crypto investors, where speculation is more focused on future valuations of ETH. As a result, investors view BTC as a safe haven and display their sense of risk aversion in the crypto industry.

Ethereum DeFi interest is dwindling

Interest in the Ethereum blockchain has soared during the pandemic, as developers began creating a wave of decentralized finance projects, including peer-to-peer exchange and lending platforms. This caused an explosion in the total locked value (TVL) in the Ethereum blockchain ecosystem, rising from $465 million in March 2020 to $159 billion in November 2021. That’s an increase of around 34,000 percent. Interestingly, ETH/BTC rose 345 percent over the same period to a 2021 peak of 0.08 due to increased demand for transactions on the Ethereum blockchain.

However, the pair has since dropped by over 35 percent and was trading at 0.057 BTC on June 26. The decline of ETH/BTC coincides with a massive drop in Ethereum TVL from $159 billion in November 2021 to $48.81 billion in June 2022, led by fears of collapse in the DeFi industry. Also, institutions have withdrawn $458 million from Ethereum-based mutual funds as of June 17 this year, indicating that interest in Ethereum’s DeFi boom has waned.

Ethereum price could drop further

Bitcoin faced smaller disadvantages compared to ETH in the ongoing bear market. The price of BTC has slumped by around 70 percent since November 2021 to around $21,500, corresponding to ETH’s 75 percent drop over the same period. Also, unlike Ethereum, Bitcoin-focused mutual funds have seen an inflow of $480 million to date, showing that BTC’s decline has done little to dampen its demand among institutional investors. Capital flows, coupled with growing distrust in the DeFi sector, could continue to bring more benefits to Bitcoin than Ethereum in 2022, causing further downsides for ETH/BTC.

ethereum fiyati

From a technical standpoint, the pair is holding above a support combination defined by an ascending trendline, a Fibonacci retracement level at 0.048 BTC, and the 200-week exponential moving average (200-week EMA) near 0.049 BTC. On a recovery, ETH/BTC could test the 0.5 Fib line around 0.062. Conversely, a decisive break below the support confluence could mean a drop towards the 0.786 Fib line at 0.027 in 2022 and drop more than 50 percent from today’s price.

Fed’s aggressive policies must subside before crypto markets bottom out

The ETH/BTC dispersal could coincide with an extended ETH/USD market drop, primarily due to the Federal Reserve’s recent quantitative tightening that has put crypto prices under lower pressure against the US dollar. Conversely, weak economic data could cause the Fed to cool its tightening frenzy. This could limit the bearish bias of ETH and other cryptocurrencies in the dollar market, according to Informa Global Markets. The firm noted:

Macroeconomic conditions need to improve and the Fed’s aggressive approach to monetary policy should subside before crypto markets bottom out.

But given that Ethereum has never regained its all-time high against Bitcoin since June 2017 despite a strong adoption rate, the ETH/BTC pair may be under pressure with an apparent target of 0.027.

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Larry Brown

I graduated from Yale University, Department of Television. I have been a professional news writer for 3 years. I am continuing my career here by establishing site 3 months ago.