Ether (ETH) price is down 5.2% between Sept. 3 and Sept. 4 after a strong rejection at the $2,550 resistance, marking eight days since it last closed above that level.
Traders are now concerned that Ether may underperform even if the broader crypto bull market resumes, as incentives for fixed income in the United States are expected to decrease. So, exactly what is putting pressure on Ether’s price?
Will Ether drop if the tech stock bubble pops?
Some market participants may attribute the lackluster performance of cryptocurrencies to traditional financial market conditions, but Ether is also facing its own set of challenges, including lower network fees, unappealing staking rewards and weak demand for its recently launched spot exchange-traded fund (ETF) products. Therefore, it’s worth exploring whether these factors will continue to drive Ether’s price down in the future.
From a macroeconomic perspective, there is uncertainty surrounding the outcome of the US Federal Reserve’s likely upcoming decision to cut interest rates, which is expected to begin in September. Esther George, former Kansas City Fed president, mentioned that there is still hope for inflation to reach 2%, but the Fed’s credibility could be questioned, especially if the job market weakens, according to Yahoo Finance.
Additionally, Philadelphia Fed President Patrick Harker stated that the Fed’s interest rate cuts could become more aggressive if the labor market deteriorates. Typically, a more expansionary monetary policy favors risk-on markets, but if investors fear a recession is looming, demand for safe-haven assets surges, causing traders to seek shelter in safer investments, which could negatively affect Ether’s price.
Traders are particularly concerned about the tech sector, especially after Nvidia shares lost a record $279 billion in market capitalization on Sept. 3. The chipmaker experienced a 14% decline over three days following two cautious research reports on the growth of the artificial intelligence sector. Furthermore, Nvidia was subpoenaed on Nov. 3 as part of a US Department of Justice antitrust investigation.
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