Ethereum Could Lose its DeFi Dominance: Is ETH Price Heading to $1400?

• The Federal Open Market Committee’s (FOMC) decision to halt interest rate hikes has caused many investors to incur losses.
• Ethereum, which invalidated the positive market sentiment created by news of easing inflation in the US, is trading at $1,636 with a 6.6% drop in the last 24 hours.
• If the ETH price continues to move below the rising trend line or the $1,600 support level, it will be difficult for bulls to stop the decline before the price reaches $1,450.

Ethereum TVL values ​​have lost billions of dollars; ETH has dropped more than 6% in the last 24 hours, and the price decline could deepen.

DeFi Pioneer Ethereum’s TVL is Declining

The Federal Open Market Committee’s (FOMC) decision to halt interest rate hikes has caused many investors to incur losses. Ethereum, which invalidated the positive market sentiment created by news of easing inflation in the US, is trading at $1,636 with a 6.6% drop in the last 24 hours.

Ethereum, experienced and pioneering in the DeFi field, has experienced a turbulent period in terms of Total Value Locked (TVL). Despite its resistance to changing market conditions, Ethereum’s position has been significantly shaken by rising stars such as Optimism (OP), Tron (TRX), Solana (SOL), and Polygon (MATIC).

Since June 2022, Ethereum’s dominance in the DeFi sector has increasingly been called into question. Layer-2 solutions like Polygon have experienced significant TVL increases due to their ability to provide faster and cheaper transactions.

This inevitably affected Ethereum’s position and led to a reevaluation of its dominance in the DeFi field. According to the latest DeFi data, TVL on the Ethereum network has lost $7.84 billion since June 15, 2022.

If this decline continues, TVL could fall below the current level of $24.36 billion, which could leave Ethereum pale compared to its all-time high of approximately $108 billion in November 2021.

The Lido platform, with the highest TVL in the Ethereum ecosystem, has a value of $12.65 billion. MakerDAO follows closely behind with nearly half of Lido’s value at $5.47 billion, followed by Aave, Curve Finance, and Uniswap.

The crypto winter is the biggest challenge for DeFi investors. As the market fluctuates, investors are forced to withdraw their locked assets to diversify their portfolios. Unfortunately, this increases the pressure on DeFi protocols like Ethereum.

The Downtrend in Ethereum Price Appears Unstoppable

The daily chart shows that bears are aggressively working to confirm a drop below the rising trend line. Ethereum’s price has been vulnerable to declines since the beginning of last week, as the US regulatory agency, the Securities and Exchange Commission (SEC), launched a series of attacks such as filing lawsuits against Binance and Coinbase.

ETH/USD Daily Price Chart

If the ETH price continues to move below the rising trend line or the $1,600 support level, it will be difficult for bulls to stop the decline before the price reaches $1,450. The On Balance Volume (OBV) indicator shows that sellers are firmly in control of the market.

All applied moving averages, including the 50-day Exponential Moving Average (EMA), 100-day EMA, and 200-day EMA, are above the Ethereum price. If the downward trend continues until the end of the weekend, a death cross pattern may emerge as the 50-day EMA (red) crosses below the 100-day EMA (blue).

Investors considering buying the dip should expect a confirmed recovery from the support at the rising trend line at $1,630. Another buyer density is located at the $1,600 level, which is the last line of defense to prevent everything from collapsing.

The Ethereum price will remain vulnerable until it reclaims the $1,800 resistance and continues to rise above $2,000.