Cryptocurrency prices plunged on Monday as investors reflected on last week’s strong jobs numbers from the United States. Ethereum price pulled back to a low of $1,620, which was much lower than its last week’s high of $1,716. Similarly, Bitcoin plunged to $22,750 while other coins like Solana and Binance Coin also plunged.
Strong NFP data
The main catalyst for the recent crypto performance was last week’s American non-farm payrolls (NFP) data. According to the Bureau of Labor Statistics, the American economy added over 500k jobs in January, the best month in over 5 months. These job additions helped drag the unemployment rate to 3.4%, the lowest level in over 50 years.
The strong NFP numbers came a day after the Federal Reserve delivered its first interest rate decision of the year. In it, the bank delivered a normal rate hike of 0.25%. Before that, the Fed increased interest rates by 0.50% in December followed by 0.75% in the previous four meetings.
Therefore, the strong jobs numbers mean that the Fed will continue hiking interest rates in the coming months. With inflation rate still above the Fed’s target of 2.0%, there is a likelihood that the bank will hike by 0.25% in its March meeting. The terminal rate will be at 5.5%.
Historically, risk assets like cryptocurrencies tend to underperform in a period of hig interest rates. This also explains why American indices like the Dow Jones and the Nasdaq 100 index have all plunged after the recent jobs numbers.
Ethereum price prediction
Turning to the 4H chart, we see that the Ethereum price has formed what looks like a double-top pattern around the $1,700 level. This pattern is one of the most accurate bearish patterns in the industry. The 25-day and 50-day moving averages have also made a bearish crossover pattern. It is also clear that the coin has lost the bullish momentum that it had a few weeks ago.
Therefore, the coin will likely have a bearish breakout as sellers target the key psychological level at $1,500. This price is about 8% below the current level. The stop-loss of this trade will be at $1,680.