Ethereum Classic price has been in a strong bearish trend in the past few days as the momentum of Ethereum Merge faded. The ETC token crashed to a low of $27.52, which was the lowest level since July 27. It has dropped by over 36% from its highest level in August.
Fed interest rate decision ahead
ETC was one of the top beneficiaries of the recent Ethereum Merge event. The coin jumped to a multi-month high as investors placed bets that it will become a viable alternative among Ethereum developers and investors.
That’s because a small group of investors believes that the previous proof-of-work Ethereum was much better than a proof-of-stake one. The previous Ethereum miners also transitioned to Ethereum Classic and other popular PoW cryptocurrencies like Firo and Ravencoin.
Therefore, the Ethereum Classic price is falling as investors sell the fact. In financial trading, investors typically buy an asset ahead of a major event and then sell it when it happens. It is known as buying the rumour and selling the fact.
ETC price has also pulled back as the hype surrounding The Merge fades. After being hyped for months, the event happened and now investors are waiting for the next catalyst.
The next key event that could move Ethereum Classic and other cryptocurrencies will be the upcoming interest rate decision by the Federal Reserve that is scheduled for Wednesday. Analysts expect that the bank will decide to hike the interest rate by 0.75% for the third straight time.
If this happens, it will mean that the Fed has hiked interest rates by 300 basis points this year. At the same time, it will continue reducing its balance sheet through its quantitative tightening policies. Most importantly, analysts expect that the Fed will hint that it will keep hiking this year. ETC price and other cryptocurrencies will likely drop if the Fed gets too hawkish.
Ethereum Classic price prediction
The four-hour chart shows that the ETC price has been in a strong bearish trend lately. It managed to move below the important support level at $30.61, which was the lowest level on August 18. The coin has also formed a break and retest pattern, which is a sign of a continuation.
It has also moved below the 25-day and 50-day moving averages. Therefore, the coin will likely continue falling as sellers target the key support level at $20.
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