Ethereum (ETH/USD) price is struggling as volume and institutional demand for cryptocurrencies wane. The coin has dropped to $2,060, which is about 10% below the highest level this week. This brings its total market capitalisation to more than $237 billion, making it the second-biggest cryptocurrency in the world.
Institutional demand fades
Institutional investors play an important role across all asset classes because of their deep pockets and the fact that they tend to hold their investments for longer. They are different from retail investors who are often sensitive to prices and volatility. In fact, the previous rally in the cryptocurrency industry was credited to large institutional investors.
However, the industry has recently received minimal support from institutional investors even as prices remain more than 50% below their year-to-date (YTD) high. According to Glassnode, institutional demand for Bitcoin was relatively sluggish in July. This translated to other cryptocurrencies like Ethereum and Cardano.
Ethereum price is also struggling as market activity in the Decentralized Finance (DeFi) industry remains substantially low. Recently, the total value locked (TVL) in the industry has dropped from an all-time high of more than $90 billion to $51 billion.
This happened as regulators started to grapple with the industry. According to the Financial Times, regulators in several countries like the United States and the United Kingdom have started grappling with the industry. A recent draft by the Financial Action Taskforce said expanded its definition of virtual asset service providers to include decentralised software.
A crackdown of DeFi would likely have a major impact on Ethereum price since most of the biggest projects are built using the network. Further, ETH is still struggling because of the ongoing crackdown in China, fears of high-interest rates in the US, and low volume in the industry.
Ethereum price forecast
The four-hour chart shows that the Ethereum price rallied by more than 33% from June 26 to June 30th. Since then, the coin has dropped by more than 10% and is trading at the current level of $2,060. The price is also slightly below the descending blue trendline. The price has also dropped below the 25-day and 15-day exponential moving averages (EMA) while the Relative Strength Index (RSI) has moved to 45. Therefore, the coin will remain in a bearish trend so long as the price is below the descending trendline and moving averages.