A major change was made to the Etsy search engine at the end of March that involved categories and as a result, it impacted many shops, even successful shops that saw traffic and sales decrease upwards of 70% in April and continuing into May. My own shop felt this impact.
However, this is what happens when there is a major change to a search engine, as many people saw several years back when Google made a substantial change and thousands of businesses lost their first page ranking. It is the nature of the SEO beast.
I have always advised shops to never put all of their eggs in one basket (for this very reason) and to have multiple sources of traffic from social media to publicity to email marketing to advertising to blogging, otherwise when something like this happens, it can really impact your business, even if it might just be temporary.
I wouldn't give up or drop prices, but rather re-strategize and find alternative traffic sources.