Key Takeaways:
– Ethereum (ETH) prices fell below $3,500 on June 11 ahead of the Federal Open Market Committee (FOMC) rate decision.
– The release of the US inflation data and the upcoming U.S. Consumer Price Index (CPI) data have impacted investor sentiment.
– The potential for persistent inflation and the Federal Reserve’s response could affect the value of ETH.
– Market participants anticipate that interest rates will remain unchanged, suggesting concerns about inflation control.
– Rising bond yields and the shift to safer investments have made cryptocurrencies less attractive.
– Ethereum’s technical analysis shows a bearish trend, with a descending channel pattern indicating a potential drop in prices.
Ethereum (ETH) prices experienced a decline below $3,500 on June 11 before the Federal Open Market Committee (FOMC) rate decision, which is scheduled to be announced on June 12 following the release of US inflation data. This critical data release has influenced investor sentiment, leading to a downtrend. Investors are closely monitoring the upcoming U.S. Consumer Price Index (CPI) data and the Federal Reserve’s announcement.
Over the past seven days, the price of ETH has been trending downward, with $3,500 being a key support level. If a rebound occurs from this level, it could potentially lead to price gains.
Investors are particularly focused on the May 2024 CPI data, which will be released on June 12 at 1330 hrs UTC. They expect this data to reveal persistent inflation pressures. If the CPI remains unchanged or increases, it would indicate that inflation is still not under control. This could prompt the Federal Reserve to consider tightening monetary policy in order to curb rising prices. A higher-than-expected CPI figure could strengthen the US dollar as investors anticipate the Federal Reserve’s response.
While the majority of the market expects interest rates to remain unchanged, suggesting a lack of confidence in the US government’s efforts to control inflation, there is a possibility that the Federal Reserve may signal an interest rate hike to manage inflation. This could result in higher returns on traditional investments, making riskier assets like Ethereum less attractive to investors who seek more stable returns.
In addition, bond yields have been rising in anticipation of potential tightening measures by the Federal Reserve. Higher bond yields offer better returns for investors, leading to a shift from riskier assets to safer investments. As bond yields rise, the opportunity cost of holding non-yielding assets like Ethereum increases, making cryptocurrencies less appealing. The combination of these factors may contribute to the current decline in Ethereum price.
The bearish sentiment in the market is also influenced by concerns about sustained inflation, potential interest rate hikes, and rising bond yields. In response to these economic uncertainties, investors are increasingly turning to safer assets that generate yields.
From a technical analysis perspective, Ethereum’s weekly chart shows a descending channel pattern, which could be another factor contributing to the decline in price. The upper trendline resistance of the channel recently rejected ETH’s rally, leading to a significant drop. If the downtrend continues, the price of ETH could potentially reach the support trendline of the channel.
The descending channel pattern, characterized by lower highs and lower lows, is considered a bearish continuation pattern. Ethereum’s failure to break above the upper trendline and subsequent decline suggests that sellers are currently in control. The volume profile also indicates that the recent downward movement is accompanied by increasing sell volume. Technical analysis suggests that the next significant support level for ETH is around $2,680, near the bottom trendline of the channel. If the price drops to this level, it would represent a 24% decrease from current levels.
However, if the price breaks below this support level, it could result in further downside, potentially pushing ETH to even lower levels.