A 2018-like bearish cycle could have Ether drop toward $420 in the coming weeks.

The price of Ethereum’s native token, Ether (ETH), careened below $1,000 on June 18 as the ongoing sell-off in the crypto market continued despite the weekend.

Ether reached $975, its lowest level since January 2021, losing 80% of its value from its record high in November 2021. The decline appeared amid concerns about the Federal Reserve’s 75 basis points rate hike, a move that pushed both cryptocurrencies and stocks into a strong bear market.

“The Federal Reserve has barely started raising rates, and for the record, they haven’t sold anything on their balance sheet either,” noted Nick, an analyst at data resource Ecoinometrics, warnings that “there is bound to be more downside coming.”

ETH/USD weekly price chart. Source: TradingView

Ethereum’s implosion continues

Investors and traders have been anxiously watching Ether’s price in recent days, fearing a decisive breakdown below $1,000 would trigger the forced liquidations of massively leveraged bets. In turn, that would put more downside pressure on Ethereum.

The fears appear due to Babel Finance and Celsius Network, a pair of crypto lending platforms that halted withdrawals citing market volatility.

They intensified further after Three Arrow Capital, a crypto hedge fund managing $10 billion worth of assets as of May, failed to shore up its collateral to cover pungent bets. This came less than a month after Terra, a $40 billion “algorithmic stablecoin” project, collapsed.

These events have coincided with a massive capital withdrawal from Ethereum’s blockchain ecosystem. The total value locked (TLV) unwind occurred in two parts. First, Ethereum’s TVL across DeFi projects fell by $94 billion after the Terra debacle in May and then by another $30 billion by mid-June.

Ethereum total value locked in DeFi. Source: Glassnode

“The deleveraging event that is underway is observably painful, and is akin to a form of mini-financial crisis,” noted CheckMate and CryptoVizArt, a pair of analysts at Glassnode, an on-chain analytics platform, adding:

“However, with this pain comes the opportunity to flush excessive out leverage, and allow for a healthier rebuild on the other side.”

How low can ETH price go?

Fed’s hawkish policies and the ongoing DeFi market implosion suggest extended bearish moves in the Ether market.

From a technical perspective, ETH’s price must regain $1,000 as its psychological support, which, if broken to the downside, could have the token eye the $830 as its next target. The same level served as resistance in February 2018, which preceded a 90% decline to around $80 in December 2018.

ETH/USD weekly price chart. Source: TradingView

Meanwhile, as Cointelegraph covered earlier, ETH/USD can fall to as low as $420 if Ether’s correction turns out to be anything like its 2018 bear cycle when the drawdown reached over 90%.

Related: 72 of the top 100 coins have fallen 90% or more: Here are the holdouts

Interestingly, the $420-downside target was instrumental as support in April-July 2018 and resistance in August-September 2020.

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