2 reasons why Ethereum price is falling - BiticaNews


The price of Ethereum dropped on Wednesday as its correlation with the Dow Jones and Nasdaq 100 indices continued. The coin dropped to $1,964, which was its lowest level this week. It was a sea of red as the prices of other cryptocurrencies plummeted.

Don't fight the Fed

The price of ETH dropped sharply as volatility in the market continued. The closely watched CBOE volatility index rose more than 5%.

There were several catalysts for this volatility. First, investors were reacting to Jerome Powell's statement on Wednesday during an event sponsored by the Wall Street Journal. In it, he reiterated that inflation is the economy's biggest challenge. He then reiterated that the Fed would do what it could to push inflation towards its 2.0% target.

Therefore, investors believe this means the bank will not come to their rescue as it did in 2018 and during the Covid pandemic. Thus, it will continue to raise interest rates by 0.50% in the other meetings. A period of quantitative tightening will also begin. As such, the price of Ethereum is falling as investors avoid fighting the Fed.

US stock correlation

The ETH price is also falling as the correlation with US equities continues. The Dow Jones Industrial Average is down more than 1,100 points, while the high-tech Nasdaq 100 index is down more than 560 points.

The drop was triggered by relative weakness in the retail sector. Target's stock price has dropped more than 25%, while Walmart has dropped more than 10% after the companies posted weak quarterly results.

Their results showed that the largest US companies were seeing wage inflation affect their businesses. Thus, the trend may continue in other sectors of the economy.

In recent months, there has been a close correlation between American stocks and cryptocurrencies like Ethereum.

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