3 reasons Ethereum price risks 25% downside in June
Ethereum's native token Ether (ETH) has dropped more than half of its value in 2022 in dollar terms, while also losing value against Bitcoin (BTC), and now remains pinned below $2,000 for several reasons.
What's more, ETH price could face even bigger losses in June due to another slew of factors, which will be discussed below.
Investors have withdrawn $250 million out of Ethereum-based investment funds in 2022, according to CoinShares' weekly market report published May 31.
The massive outflow appears in contrast to other coins. For instance, investors have poured $369 million into Bitcoin-based investment funds in 2022.
Meanwhile, Solana (SOL) and Cardano (ADA), layer-one blockchain protocols competing with Ethereum, have attracted $104 million and $9 million, respectively.
The withdrawals from Ethereum funds are a sign of how the recent crash in TerraUSD (UST) and LUNA—tokens within Terra's algorithmic stablecoin ecosystem—has dampened interest in the overall DeFi sector.
ETH's bullish prospects remain glued to anticipations of a boom in the DeFi market, because Ethereum's blockchain host a majority of financial applications in the sector. As of June 5, the total valued locked (TVL) inside the Ethereum-based apps was $68.71 million, almost 65% of the total DeFi TVL.
But the TVL still reflects a massive retreat from Ethereum's DeFi pools, which, before LUNA and UST's collapse on May 9 was hovering around $100 billion.
With macro risks led by the Federal Reserve's hawkish policies, coupled with a cautious outlook around the DeFi sector, Ether looks poised to continue its decline in June, according to Ilan Solot, a partner at Tagus Capital.
He told the Financial Times:
Trading behavior witnessed since May also paints a bearish
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