Ethereum (ETH/USD) price remained under pressure as the recent Merge failed to lift prices and the VIX index surged. The coin crashed to a low of $1,210, which was the lowest level since July 16 of this year. It has crashed by more than 35% from its highest level this month.
VIX index jumps
Ethereum and other relatively riskier assets have come under intense pressure as volatility in the financial market rises. The closely-watched VIX index has risen to $32, which is much higher than this year’s high of less than $20.
VIX is an index that was created by CBOE and Goldman Sachs to evaluate the amount of volatility in the stock market, It looks at the options market in the S&P 500 index to determine the positioning among investors.
This volatility increased this week. For example, on Wednesday, Vladimir Putin increased his pressure in Ukraine by threatening to use nuclear weapons in the crisis. As a result, there are high chances that the crisis will escalate and increase existing risks.
Meanwhile, as I wrote in this article, the Federal Reserve concluded its two-day meeting on Wednesday and continued with its hawkish tone. The bank decided to hike interest rates by 0.75% for the third straight month. As such, the Fed has increased rates by 300 basis points this year, the most in decades.
Most importantly, the Federal Reserve’s dot plot showed that most members believe that interest rates will continue rising in the coming months. Precisely, they expect that the Fed will hike by 0.75% in November and 0.50% in December.
As a result, most financial assets like the Dow Jones and the Nasdaq 100 have all continued falling. Cryptocurrency prices also nosedived. The US dollar index has risen to the highest level in more than 2 decades.
Ethereum price prediction
The daily chart shows that Ethereum price has been in a strong downward trend in the past few months. It managed to move below the important support level at $1,423, which was the lowest level on August 29. The coin has also crashed below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved close to the oversold level.
Therefore, there is a likelihood that Ethereum will continue falling as sellers target the next key support level at $1,000. A move above the resistance level at $1,500 will invalidate the bearish view.
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