As a seasoned researcher with over two decades of experience in financial markets, I have seen my fair share of market fluctuations and trends. The recent downturn in Ethereum (ETH) price following the US Consumer Price Index (CPI) report is reminiscent of the unpredictable nature of this industry.
After the release of the US Consumer Price Index (CPI) report suggesting a decrease in inflation, the value of Ethereum (ETH) swiftly reversed its 24-hour gains. This significant altcoin dipped by 2.5% alongside a Bitcoin price drop below $60,000, after reaching over $61,000 on Wednesday.
Ethereum Price Uptrend Falters After CPI Data Release
Since last Monday, the price of Ethereum has followed closely behind, indicating the ongoing apprehension in the cryptocurrency sector. Initially, investors anticipated that the figure would approach $3,000 following the pre-CPI release surge above $2,700; however, a sudden adjustment caused the Ethereum price to dip to around $2,645 on the exchanges.
According to the Consumer Price Index (CPI) data for July, inflation rose by 0.2% compared to the previous month. This increase caused the overall annual inflation rate to drop below 3%, settling at 2.9%. It’s been since March 2021 that we’ve seen an annual inflation rate this low. The actual CPI figure for July was lower than economists’ predictions, with a monthly change of 0.2% and an annual rate of 3%. Excluding food and energy prices, the core CPI stayed constant at an annual growth rate of 3.2%, as anticipated.
Despite hints from the Federal Reserve suggesting potential interest rate reductions, the recent drop in Ethereum and Bitcoin prices demonstrates a hesitancy among traders who are cautiously optimistic rather than fully committed. With the Core Consumer Price Index remaining constant, it seems unlikely that the Fed will opt for a more substantial 0.5 percentage point cut; instead, expectations are now leaning towards a smaller 0.25 percentage point adjustment.
ETH ETF Drawdown Raises Concerns
The cost of Ethereum slightly increased to $3,561 following the commencement of ETH ETF trading in July. Yet, with less demand than Bitcoin ETFs during Q1, there remains a persistent negative impact on Ether.
As reported by SoSoValue, Ethereum ETFs have seen a total of seven positive investment days since their launch, compared to nineteen days of negative outflows. However, the latest two days have shown a positive trend for stock-based ETPs, with approximately $4.93 million and $24.34 million in fresh investments respectively.
Even though Ether ETFs have seen a recent increase, they are still falling behind, with a total net outflow of $376.67 million. Investors had hoped for a Bitcoin-like surge, but the poor performance decreases the likelihood of Ethereum reaching its all-time high in 2024.
Initially, the significant rise from $2,111 took a pause at $2,774 on Wednesday, leading to an instant drop, trading at $2,645. As per the Ethereum price forecast, the declining Relative Strength Index below 50 suggests a temporary control by bears.
At the price level of $2,665, the intersection of the 20-day and 50-day Exponential Moving Averages (EMAs) suggests a potentially unfavorable short-term outlook. It’s anticipated that the price might revisit the support at $2,600 during the American trading session. If traders decide to sell off more long positions due to this resistance, a potential drop to $2,100 could ensue.
Peter Bradt, a well-known trader, recently shared his technical perspective on various assets, predicting that ETH could potentially drop to around $1,651. He emphasized two significant patterns – a five-month rectangle formation and a rising wedge – both suggesting a bearish trend. Traders might anticipate a profit-to-loss ratio of 3:1, but remember that these patterns can be unpredictable, so additional analysis using key technical indicators is recommended.
As a seasoned trader with over two decades of experience under my belt, I’ve learned that adaptability is key to success in this fast-paced market. And while I may not be the biggest fan of ETH, I can appreciate its potential as a trading instrument. Here, I want to share how I approach trading ETH, so fellow traders don’t take offense.
— Peter Brandt (@PeterLBrandt) August 14, 2024
According to IntoTheBlock’s IOMAP model, strong resistance around $2,263 to $2,345 may help halt the downward trend. Approximately 2.24 million Ethereum addresses collectively hold about 50.36 million ETH, which could potentially lead to a significant price increase towards $3,000 if selling pressure decreases.
According to the IOMAP model, it appears that resistance to reaching $3,000 for Ether is decreasing. If Ethereum manages to surpass the $2,800 threshold, it could potentially rise above $3,000.
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2024-08-14 20:21