Oversold levels of Ethereum have reached a high that traders hadn’t witnessed for almost two years, according to the Relative Strength Index (RSI).
The RSI, an indicator that measures the momentum of assets to analyse overbought or oversold conditions, illustrated the magnitude of Ethereum’s recent price dump.
With the cryptocurrency market suffering from losses up to 20% this week, Ethereum has been one altcoin hit harder than others, as well as Bitcoin experiencing a 10% hit in the past week, having dropped from a value of $48,123 to $42,317, at the time of writing.
Both cryptocurrencies set record highs in recent months and had started off 2022 with a sobering reality of its volatility.
What caused the plunge?
Several reasons came to light regarding Ethereum’s drop, most notably, the findings of the Federal Reserve December meeting which demonstrated its aim to push through a faster timetable for hiking interest rates in 2022.
Trading in the interest-rate futures market showed a strong possibility for the first increase to occur in March and, minutes after the findings were released, Ethereum subsequently dipped.
With fears of higher inflation, Sean Farrell and Will McEvoy, strategists at Fundstrat Global, stated investments across smart contract platforms could be the way to go.
“Given the current macro backdrop, leverage within the Bitcoin market, and recent robustness seen in the altcoin market, we think it’s appropriate to be overweight Ethereum and other smart contract platforms,” they said.
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