Ethereum Price Forecast: Why has ETF dropped to $2,000 after October's hot CPI reading? - www.tmgm.com
Ethereum (ETH) fell to $2,000 on Tuesday as rising US inflation and outflows from exchange-traded funds weighed on sentiment.
Selling pressure dragged Ethereum towards $2,000 on Tuesday, with the cryptocurrency facing significant downward pressure. Weekly losses for the leading altcoin widened to nearly 11% after a 4% slide over the past 24 hours, with ETH futures liquidations reaching $254.8 million.
The sell-off followed October's stronger-than-anticipated Consumer Price Index (CPI) inflation report. According to the Bureau of Labor Statistics, CPI increased 0.4% month-on-month against a forecast of 0.3%, while core CPI rose 0.3%, exceeding the monthly estimate of 0.2%.
Rate hike expectations
Expectations of a rate increase at the Federal Reserve's forthcoming December meeting jumped following the inflation data. The CME FedWatch tool put the probability of a 25 basis point hike at 90.5%, with the likelihood of a 50 basis point increase rising to 9.5%.
A high interest rate environment typically weighs on the performance of risk assets, including cryptocurrencies. This has been particularly evident in Ethereum's recent price action.
ETF outflows continue
Adding to the pressure, Monday saw US spot ETH ETFs register net outflows of $184.5 million, their biggest single-day withdrawal in more than a month. These products have recorded weekly net outflows since the start of October, with last week marking the sixth consecutive week of withdrawals.
With ETH trading beneath its 20-, 50-, and 100-day Exponential Moving Averages (EMAs), the daily chart retains a bearish short-term bias. The nearest support is at $1,971, with a breach potentially bringing the next important floor around $1,827 into focus.
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