Ethereum price set to tank 15% as markets get a reality check on the Christmas rally

Ethereum (ETH) price was still pronged for a rally earlier this week as the situation in financial markets started to clear up. However, since Tuesday, reality has kicked in that the Christmas rally will not happen, similar to plenty of workers hearing that there will be no Christmas bonus or wage increase to pair the inflation spikes. Currently, correlations are breaking down in global markets as the US Dollar weakens, equities still sell-off and bond prices decline massively as investors exit markets in all asset classes.

ETH is in trouble and it could get ugly on the way down

Ethereum price was riding a wave of hope as markets seemed to have factored in several elements that pointed to the Fed soon ending its hiking cycle, having a moderate recession or even missing out on that, and tying up with growth somewhere in the fall of next year. Markets realize it has been too easy and too quickly priced in as investors are backing away after several economic data numbers pointing to a toxic cocktail for global markets. Higher unemployment, massive layoffs, low to no growth and possibly contraction of several economies, mixed with a possible house pricing crash and sticky elevated inflation, make investors cash in and choose cash as their favorite place.

ETH will see massive selling pressure, which will easily bring price action down to $1,073, testing the low of November. From there, it is just a few US Dollars towards $1,014, an intermediary limit aligned up that could do the trick for now. If selloffs start to accelerate in the Dow Jones with over a 1000 points loss on one day and weekly jobless claims in the US rising, expect ETH to exit $1,000 and start trading at $830.93 near the low of 2021.

 ETH/USD daily chart

Markets could still return to their senses and start trading higher once the eventful week of next week is done. Markets will eagerly watch the Fed on Wednesday for any hopes or supportive messages from Fed Chair Jerome Powell to cling in the remaining calm weeks of the year to still make some bucks. ETH, n that scenario, would be closing the year near $1,688.