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The EOS (EOS/USD) price has rebounded in the past few hours as investors rush to buy the dip. The coin is trading at $3.1985, which is about 40% above the lowest level during the weekend. Its total market capitalization has bounced back to more than $3 billion.
Why EOS declined
EOS, like all other cryptocurrencies, declined sharply during the weekend. Indeed, the coin declined to the lowest level this year. It has already tumbled by more than 80% from its highest level this year.
For starters, EOS is a blockchain project that is run by the EOS Foundation. The origin of the platform can be traced to when Block.one launched the biggest Initial Coin Offering (ICO) in the world. This ICO raised more than $4 billion.
EOS is a platform like Ethereum in that developers can use its network to build applications in almost all industries. According to DappRadar, some of the top Dapps built using the network are Defibox, Newdex, and Emanate.
However, in reality, EOS has not achieved the significant scale to compete with the likes of Ethereum and Binance Smart Chain. Indeed, the head of the EOS Foundation recently admitted that EOS had become a failure because of the significant control by Block.one.
There are several reasons why the EOS price crashed during the weekend. First, the decline was in sync with that of other cryptocurrencies like Bitcoin and Ethereum.
Second, the drop was mostly because of a recent statement by Jerome Powell, the Federal Reserve chair. In it, he said that the bank will seek to end its accommodative policies sooner than expected. This statement led to worries that risky assets like cryptocurrencies would decline. Third, investors are concerned about the slow growth of the EOS ecosystem.
EOS price prediction
The four-hour chart shows that the EOS price has been in a deep sell-off in the past few weeks. Indeed, the coin started its freefall in May this year. It accelerated when it declined below $3.822, which was the lowest level in October and November this year.
The coin is still below the 25-day and 50-day exponential moving averages. It also seems like it is forming a bearish flag pattern.
Therefore, I suspect that the coin will attempt to do a dead cat bounce and then resume the bearish trend. A dead cat bounce happens when an asset’s price rallies after a big decline.