The VeChain price crashed below $0.05 on Wednesday as the sell-off in cryptocurrencies accelerated. The VET price has dropped by more than 80% from its all-time high, bringing its total market capitalisation to more than $3.6 billion.
Why VeChain declined
The VET price dropped to the lowest level since June as part of the overall sell-off of cryptocurrencies. Bitcoin, the biggest digital currency in the world, declined below the key support level of $30,000 while Ethereum crashed to $1,700. Therefore, the current price action of VeChain provides further evidence of the close correlation of cryptocurrencies.
Therefore, the root cause of the ongoing sell-off was the overall fear in the market as the number of Coronavirus cases rose in most countries. In the UK, the government confirmed more than 68,000 new cases on Monday even as it removed the existing restrictions. Similarly, in Australia, the government returned some restrictions in Victoria and New South Wales.
Further, in France, the government is toying with the idear of returning some restrictions in Paris. Additionally, the number of cases is rising in most states in the US.
Therefore, investors are realizing that the coronavirus pandemic is here to stay. Furthermore, some of the most affected countries are those that have the highest vaccination rates. At the same time, data from the UK shows that about 40% of all people who are being admitted in hospital have already received the jab.
To some extent, this news should be positive for the VeChain price. This is because it will remove the Federal Reserve’s urgency to start hiking interest rates. In the past few weeks, robust data from the US has caused many investors to start pricing in more tightening from the Fed. For example, data showed that consumer prices rose by 5.4% in June while retail sales also rose by 0.1%.
VeChain price prediction
The daily chart shows that the VeChain price has dropped significantly in the past few weeks. And today, the coin declined below the important support at $0.0676. The coin had struggled moving below this support several times in May and June. It was also the lower side of the descending channel.
Another notable thing that happened was the death cross. This is when the 50-day and 200-day moving averages makes a bearish crossover.
Therefore, the coin will likely keep falling as traders target the next key support at $0.0285, which is about 50% below the current price. On the flip side, a move above the resistance at $0.08 will invalidate this price action.