For the first time since after November 2018, Ether, the native token of Ethereum, entered the ‘oversold’ zone on June 12 as revealed by the weekly RSI (Relative Strength Index). Though not yet confirmed, that was the last time that Ethereum went oversold on the weekly.
The price of ETH had skyrocketed by over 400% it was oversold previously in the last quarter of 2018. Analysts are of the opinion that Ethereum prices could slide to a low of $650 before it forges a reversal in trend. The annual losses of ETH now stand at -42%.
Ethereum Closely Mirroring Price Movement Of Bitcoin
Ethereum has lately mirrored the price movement of Bitcoin. Ether slid 7% from its value within a day and has dropped to $1,875. It now stands at $1,348 as it reports a loss of 25%.
Over the last week, the altcoin dropped a fifth of its value. The maximum loss was reported following the announcement by the US Labor Dept. that inflation had gone up to 8.6% last month. It was their highest level in over 4 decades. Consequently, ETH is now in an oversold zone, a first in more than 36 months, RSI figures revealed.
Assets are deemed oversold when their relative strength index drops below 30. This metric further suggests that investors are at an opportune moment to pick up the asset. It could then lead to a reversal in the trend in the short term to the midterm. Previously, Ethereum oversold in the last quarter of 2018, but it made up a massive rally of 400%.
Despite the bullish outlook for the future, macro factors continue to bear down on ETH, including inflationary pressure, and technical indicators pointing towards a short-term southward movement.
The high CPI reading could also cause the Fed to aggressively slash its $9T balance sheet. That would make investors more risk-averse to assets like Ethereum and other tech stocks.