ETH and $1,850 in the Hands of the US Debt Crisis and Staking Stats

Key Insights:

• On Saturday, ETH saw red for the seventh time in eight sessions, falling by 0.66% to end the day at $1,796.
• Staking inflows and the US debt ceiling impasse left ETH in the red as investors considered Beacon Chain-related news.
• The technical indicators remained bearish, signaling a return to sub-$1,700.

Ethereum (ETH) fell by 0.66% on Saturday. Reversing a 0.72% gain from Friday, ETH ended the day at $1,796. Significantly, ETH fell for the seventh time in eight sessions and fell short of the $1,850 handle for the third consecutive session.

A bullish start to the day saw ETH rise to an early high of $1,817. Falling short of the First Major Resistance Level (R1) at $1,837, ETH fell to an early afternoon low of $1,786. However, steering clear of the First Major Support Level (S1) at $1,758, ETH revisited the $1,807 handle before easing back.

US Debt Ceiling and Recessionary Jitters Delivered Another Loss

The G7 and the US debt ceiling impasse grabbed the news headlines on Saturday. The increased risk of a US default was a hot topic amongst the G7, with policymakers expecting a default to fuel US and global economic recessions.

On Saturday, President Joe Biden attempted to calm voters, talking about progress. However, failure to reach an agreement to raise the debt ceiling remained a headwind.

While the debt crisis remained the focal point, news of Beacon Chain issues in confirming transactions tested buyer appetite and likely influenced staking and withdrawal statistics.

The Ethereum Foundation announced that epochs 3 and 8 could not reach finality for almost one hour. The Beacon Chain faced a similar issue on Thursday when the finality problem lasted nearly 30 minutes.

According to the announcement,

“Although the network was unable to finalize, the network was, as designed, live and end users were able to transact on the network. This was made possible due to client diversity as not all client implementations were affected by this exceptional scenario.”

ETH staking statistics and the withdrawal profile added to the bearish sentiment.

Staking Stats and the Withdrawal Profile Weighed

According to CryptoQuant, staking inflows tumbled from 215,712 ETH on Friday to 81,632 on Saturday. However, the impact of the decline was modest, the weekend pullback a comment trend post-Shapella.

The total value-staked continued rising despite the fall in staking inflows and the bearish ETH session. While inflows fell below 100,000, levels were higher than historical Saturday trends.

Overnight, the withdrawal profile was bearish. Principal withdrawals climbed to above-normal levels. Withdrawal projections for the morning session are less bearish, with principal ETH withdrawals projected to trend lower.

The spike in principal withdrawals coincided with a sharp fall in staking inflows, a bearish combination. On Saturday, the net ETH staking balance fell from a surplus of 190,440 ETH to a 158,540 ETH surplus, equivalent to $291.39 million. Deposits totaled 225,690 ETH versus withdrawals of 67,150 ETH.

According to TokenUnlocks, total pending withdrawals stood at 36,080 ETH, equivalent to approximately $64.76 million.

The Day Ahead

Staking statistics and the withdrawal profile will continue to provide direction. Another spike in principal withdrawals and a further decline in staking inflows would be bearish.

However, the US debt ceiling impasse will also influence. The chances of a US debt default are gathering momentum. The NASDAQ mini will provide direction in the final hour, with the US futures likely to reflect the status of debt ceiling talks in Washington.

Investors should monitor the crypto news wires throughout the session. SEC v Ripple case-related news will move the dial, with Binance and Coinbase (COIN) also in focus.

Ethereum Price Action

At the time of writing, ETH was up 0.01% to $1,796. A mixed start to the day saw ETH rise to an early high of $1,803 before falling to a low of $1,791.

ETH Technical Indicators

Resistance & Support Levels

ETH needs to move through the $1,800 pivot to target the First Major Resistance Level (R1) at $1,813 and the Saturday high of $1,817. A move through the morning high of $1,803 would signal a breakout session. However, ETH staking statistics and US debt ceiling-related news must support a breakout.

In the event of an extended rally, the bulls would likely test the Second Major Resistance Level (R2) at $1,831 and resistance at $1,850. The Third Major Resistance Level (R3) sits at $1,862.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1,782 in play. However, barring another risk-off-fueled sell-off, ETH should avoid sub-$1,750. The Second Major Support Level (S2) at $1,769 should limit the downside. The Third Major Support Level (S3) sits at $1,738.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. Ethereum sat below the 50-day EMA, currently at $1,833. The 50-day EMA fell back from the 200-day EMA, with the 100-day EMA pulling back from the 200-day EMA, delivering bearish signals.

An ETH move through R1 ($1,813) would give the bulls a run at R2 ($1,831) and the 50-day EMA ($1,833). However, failure to move through the 50-day EMA ($1,833) would leave S1 ($1,782) in view.

A breakout from the 50-day EMA would send a bullish signal.