Ethereum ricochets, but ETH price threatens to turn $ 2.3,000 into new resistance

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Ethereum’s native token Ether (ETH) reclaimed $ 2,000 in early New York trading hours on Wednesday as crypto traders evaluated the prepared statement from Federal Reserve Chairman Jerome Powell.

The ETH / USD exchange rate rose 7.19% to hit its intraday high of $ 2,019.90. Likewise, Bitcoin (BTC), whose 7-day positive correlation with ether is 0.84 above zero, rose, albeit a modest 0.75%, to hit $ 32,379.

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Ether ricochets off the key support area on Wednesday morning. Source: TradingView

Powell presented his semi-annual monetary policy report to Congress on Wednesday, the day after the US consumer price index report rose 0.9% between May and June, hitting 5.4% for the first time in three decades.

In prepared remarks before testifying to Congress, Powell stated that inflation would remain high for the coming months. Still, the central bank governor added that rising consumer prices would not deter them from their sustained bond buying policy.

Powell said the limit on capping his $ 120 billion monthly debt purchases – which has cushioned the US economy throughout the coronavirus pandemic – was “still a long way off.” Quoting the US labor markets, he said that their full recovery was “a long time to come”.

The statements came after a Bank of America poll of global fund managers who believed the world economy would continue to improve fell sharply from 91% in March to 47% in July. The same survey identified long bitcoin – betting on rising BTC / USD rates – as one of the busiest trades alongside long ESG and long commodities.

Economic expectations have reached their peak. Source: BoA

But both Bitcoin and Ether fell after Tuesday’s CPI report and before Powell’s testimony was released, drawing critics for not behaving like a haven in the face of higher consumer prices. One of the reasons was fears that sometime in 2020 the Fed would signal a tapering of its bond purchases and not raise its key rates until January 2023.

Powell’s reassurance that their plans to reduce them are still a long way off has brought short-term optimism to the cryptocurrency market that is benefiting Bitcoin and Ether alike.

A technical leap?

Ether’s recent uptrend also appeared in the wake of a level of technical support that in the recent past has limited ETH / USD’s bearish bias.

ETH was stuck in a symmetrical triangle area. Source: TradingView

The lower price limit mentioned serves as a rising trend line in a symmetrical triangle pattern. Ether has been fluctuating within this structure since mid-June, as shown in the graph above, increasing its likelihood of retesting the triangle’s resistance trendline (above the $ 2,300 level) in the upcoming sessions.

Still, symmetrical triangles are continuation patterns that typically send prices in the direction of their previous trend. As Ether’s current triangle formation is in a downtrend, ETH / USD’s path of least resistance is on the downside.

Symmetrical triangles breakout scenarios. Source: Scanz Trading Blog

Hence, Ether continues to be exposed to bearish risks on technical patterns. Nevertheless, despite a brutal sell-off in the crypto market, the cryptocurrency performed better than expected in the second quarter of 2021.

In its Q2 report released in July, data intelligence company CoinMetrics found that Ether closed the financial quarter 13.2% higher than Bitcoin -38.88%. It wrote:

“ETH benefited from a renewed surge in retail interest, driven in part by the rapid surge in NFTs. Although NFT media interest peaked in March, it helped bring Ethereum unprecedented attention in the mainstream, resulting in a flurry of new ones User led. “

Further upside prospects for Ether come from London Hardfork. The upgrade would implement four suggestions for improving the Ethereum blockchain. One of the proposals, dubbed EIP-1559, expects ETH to become a deflationary asset by burning off part of the fee charged by Ethereum users.

However, investment sentiment tracker Santiment was somewhat cautious, warning traders against excessive speculation related to the London hard fork event. An excerpt from the July 7th newsletter reads:

“You could say, ‘It’s different this time’, as the ETH can now be staked out and with the upcoming EIP1559 it will be a turning point, etc. […] At the moment everything is speculative and no one will really know how the market will react to the implementation. It could read: “Buy the rumor, sell the news”.

The views and opinions expressed are those of the author only and do not necessarily reflect the views of Cointelegraph.com. Every step of investing and trading involves risk, so you should do your own research when making a decision.