Can Ethereum (ETH) Bottom At $2,600 After NY Fed’s Chair Comments?

Ethereum (ETH) has gone down by 13% in the past 7 days, but has recovered strongly off today’s early losses after brief breaking below the $2,700 level.

Trading volumes surged by 37% as bulls seem to be willing to defend this line to avoid a catastrophic drop. ETH’s volumes currently account for 17% of the token’s circulating market cap, emphasizing the strength of the selling pressure.

Top 5 Tokens by 24H Liquidations – Source: CoinGlass

Crypto liquidations spiked to $2 billion in the past 24 hours, with $1.7 billion of that total being long positions. ETH accounts for a bit more than 30% of that total, while Bitcoin captured the lion’s share with $900 million in wiped-out longs as it dropped by 10% at some point during the session.

New Your Fed Chair Still Sees “Room” for Another Rate Cut

Market sentiment showed signs of extreme depression today as the Fear and Greed Index dropped to 11. This is the lowest level on record that this sentiment gauge has reached, as investors were spooked by some worrying macroeconomic trends.

First of all, the Federal Reserve’s Chairman, Jerome Powell, questioned the certainty of a rate cut in December. Analysts had initially assigned a 91% probability to a 25 basis points cut next month, but those odds dropped to 41% recently at some point this week.

However, the head of the New York Fed, John Williams, commented on Friday that he sees “room for adjustment” for interest rates down the road.

“I still see room for a further adjustment in the near term to the target range for the federal funds rate to move the stance of policy closer to the range of neutral, thereby maintaining the balance between the achievement of our two goals,” Williams commented during a speech in Santiago de Chile.

FedWatch’s Target Rate Probabilities – Source: CME Group

The market seems to have interpreted this as a buy signal as cryptos recovered from their early losses and ETH rapidly surged from $2,600 to $2,800. Rate cut odds have now improved to nearly 70% after these comments, as the market seems completely focused on the overall macro landscape rather than cryptos’ improving fundamentals.

The last time that the Fear and Greed Index hit such a low level, 15 in April, the market started to recover and, just a few weeks after, Bitcoin (BTC) made a new all-time high.

If rate-cut-panic has truly ended, then this could be the market’s bottom, same as it happened in April, and we could start seeing a recovering within the next few weeks.

Every Technical Indicator is Screaming “Bottom”

Looking at the daily chart, we can see the long wick that ETH has left today after it moved below $3,700. Trading volumes have reached 3 times the 14-day moving average, a clear indication that this is a highly contested area for bulls.

ETH/USD Daily Chart (Binance) – Source: TradingView

Both a former horizontal resistance and a trend line support are in confluence at this level, increasing its technical relevance.

We will have to wait until the session ends at least to draw further conclusions about what today’s move could imply, as the jury is still out and sellers could come back rushing to retest that $2,600 level.

Bearish momentum is still quite strong as reflected by the Relative Strength Index (RSI), which has reached 28 at the time. The last time the RSI got this low, the market also bottomed.

So everything is pointing to the possibility that ETH could hit bottom at $2,600. Timing the market is commonly not a good idea, but the odds do favor a rebound off this mark after many days of strong selling.