As the cryptocurrency market braces for the Federal Open Market Committee (FOMC) meeting, Ethereum’s price has recently experienced a downward trend, sparking speculation and concern among investors. Let’s delve into the factors driving Ethereum’s recent decline and assess the potential implications for the market moving forward.

Ethereum’s price has encountered significant volatility in recent days, breaking downward from a consolidation zone amid anticipation of the upcoming FOMC meeting. Market analysts are closely monitoring the meeting, with expectations of high interest rates setting the stage for market uncertainty.

During European business hours on Tuesday, Ethereum’s price stood at $3,549, marking a 3.7% drop in the last 24 hours and a further 5.9% decrease over the past 7 days, according to CoinGecko data. This downward trajectory has raised questions about Ethereum’s short-term price outlook and the factors driving this recent downturn.

ETH/USD Price Analysis: Bears Take Hold of the Market, These Are the Support Levels to WatchEthereum’s price was previously trending within a consolidation zone, forming part of a larger bull flag market structure. Bull flags typically signal bullish sentiment, with market participants anticipating an upward resolution of the pattern. However, Ethereum’s price experienced significant downward pressure on June 11, leading to a breakout below the consolidation range and invalidating the bull flag pattern on the 4-hour timeframe.

Despite this bearish development, Ethereum’s price action on the daily timeframe continues to trend above the 50-day and 200-day simple moving averages (SMA), albeit with minimal distance. If bearish sentiment persists, Ethereum’s price may find support around the 50-day SMA, coinciding with the 0.5 Fibonacci retracement level, potentially stabilizing around $3,400. Further support levels are identified around $3,200 and $2,900.

On the flip side, if bullish momentum prevails, Ethereum’s price could rally towards the lower boundary of the previous consolidation range around $3,650. A successful breakout above this level may pave the way for further upside potential, with resistance levels at $3,700 and $3,950. Notably, $3,650 represents a significant resistance level for Ethereum’s price action at present.

Why is the Ethereum Price Crashing?The recent decline in Ethereum’s price coincides with heightened market uncertainty ahead of the FOMC meeting, mirroring similar price movements observed in Bitcoin. Speculation abounds within the crypto community regarding the potential impact of the FOMC outcome on market sentiment.

Market analysts from Bankrate anticipate that the FOMC will maintain interest rates at a 23-year high during the upcoming meeting. However, projections suggest that there may be minimal rate cuts, if any, before the end of 2024. This anticipation of high interest rates has contributed to market jitters and increased volatility across the cryptocurrency landscape.

Meanwhile, Ethereum’s fundamentals remain robust, with the Ethereum mainnet continuing to dominate in transaction fees compared to Layer 2 solutions. Despite market turbulence, Ethereum’s strong fundamentals may help cushion the impact of negative market sentiment stemming from the FOMC meeting.

In conclusion, investors remain vigilant as they await the outcome of the FOMC meeting and the subsequent market reaction. Ethereum’s price trajectory may be influenced by FOMC decisions and accompanying commentary, underscoring the importance of monitoring market developments closely in the days ahead. Despite short-term volatility, Ethereum’s positive fundamentals may serve as a stabilizing force amidst market uncertainty, providing investors with confidence in the long-term potential of the Ethereum ecosystem.