The Ethereum price had a difficult month in May. After surging to an all-time high of $4,380, the currency declined by 60.50% to a multi-month low of $1,732. It then bounced back to the current level of $2,657, bringing its market capitalization to more than $307 billion. As ETH jumped, other similar coins like Polygon and Ethereum Classic also soared to an all-time high in May.
Ethereum volatile month
For starters, Ethereum is the second-biggest blockchain project in the world after Bitcoin. The platform is also the most important in the blockchain industry since it is the one used to build other platforms.
For example, most of the biggest Decentralized Finance (DeFi) projects in the world like Maker, Aave, Uniswap, and Polygon are built using its technology. Ether is the native token used in the network.
However, Ethereum is also known for its bugs and congestion. As such, more developers are moving to alternative platforms. Among the most popular alternatives that have come up are Binance Chain, Cardano, and Polkadot.
Ethereum price has recently outperformed other cryptocurrencies because of the surging transactions in the network. For example, in May, the total value locked (TVL) in the DeFi ecosystem soared to more than $90 billion. This was a substantial growth considering that the industry was unexistent a few years ago.
Ether price action in June
Ethereum price wavered in May because of three things. First, there was the fact that May was the final month for US citizens to file their taxes. As a result, many financial assets, including stocks, declined slightly in May. Whenever such price action happens, the sell-off is usually more pronounced in cryptocurrencies since they are mostly held by retail traders.
ETH price also declined because of the rising fears of regulations in the United States and China. In May, a group of Chinese trade bodies announced that their members would be barred from dealing with the currencies. The People’s Bank of China (PBOC) endorsed the measures.
In the United States, there are fears that the Biden administration will crackdown on the sector after the Colonial Pipeline hack.
Ethereum price also declined because of the actions by Elon Musk, the influential CEO of Tesla. In May, he announced that Tesla would stop accepting Bitcoin. The announcement affected Ether because of the close correlation between the two.
Finally, the currency wavered because of high-interest rate concerns in the United States. This is after data showed that the labor market continued to tighten in April while inflation continued to rise. You can read my article on the relationship between inflation and Bitcoin here.
Ethereum price prediction
Turning to the weekly chart, we see that the ETH price has gone through a challenging period in the past few weeks. However, we also see that the price is in the second consecutive week of gains. The pair is also being supported by the 50-week and 25-week exponential moving averages (EMA).
Therefore, there are two scenarios that will happen in June. First, this recovery rally could fade. If this happens, the currency will likely retest the next key support at $1,420, which was the highest level in January 2018.
Second, ETH price could find more buyers in June and push higher. A move above the psychological level of $3,000 will open up to this possibility.