ETH Bears Eye $1,850 on Bearish Withdrawal Profile and Staking Inflows

Key Insights:

• On Saturday, ETH bucked the broader market trend, rising by 0.85% to end the day at $1,909.
• Recessionary jitters and Fed Fear weighed, with an improving withdrawal profile provided support.
• The technical indicators are turning bearish, signaling a return to $1,850.

Ethereum (ETH) rose by 0.85% on Saturday. Reversing a 0.84% gain from Friday, ETH ended the day at $1,909. Despite the bearish session, ETH avoided sub-$1,850 for the Third consecutive session.

After a mixed start to the day, ETH rose to an early afternoon high of $1,919. Coming into the range of the First Major Resistance Level (R1) at $1,920, ETH fell to a late afternoon low of $1,885. Steering clear of the First Major Support Level (S1) at $1,870, ETH bounced back to end the day at $1,909.

Recessionary Jitters, Fed Fear, and First Republic Bank Draw Interest

It was a quiet Saturday session. Investors had no corporate earnings or economic indicators to consider. The lack of external market forces left US economic indicators from the week and the Amazon.com (AMZN) warning to resonate ahead of the Fed interest rate decision.

According to the CME FedWatch Tool, there is an 83.9% chance of a 25-basis point interest rate hike on Wednesday, unchanged from Friday. However, the probability of a 25-basis point interest rate hike in June rose from 23.9% to 26.8%.

A Fed interest rate hike on Wednesday, with hints of more hikes, would be a bearish crypto scenario. However, the increased threat of First Republic Bank (FRC) heading for collapse provided support.

ETH Staking and Withdrawals Analysis

Staking statistics and the withdrawal profile tested buyer appetite, though the withdrawal profile improved for the day ahead.

According to CryptoQuant, staking fell from 76,096 ETH on Friday to 34,432 on Saturday, the lowest inflow since April 12.

Total value-staked flattened because of the decline in staking inflows and a rise in withdrawals.

The withdrawal profile was ETH-negative as the staking statistics sent bearish signals. Overnight, a spike in principal ETH withdrawals likely pegged ETH back from more meaningful gains.

There was a shift in the net staking balance on Saturday, with the net balance falling from a surplus to a 128,440 ETH deficit. However, the projections point to a pullback in ETH withdrawals, signaling a possible shift to a positive net staking balance at current ETH staking levels.

Withdrawals totaled 209,670 ETH on Saturday versus 81,230 ETH deposits.

According to TokenUnlocks, total pending withdrawals stood at 0.451 million ETH, equivalent to approximately $0.856 billion. Significantly, the withdrawal profile turned bullish for the day ahead, with projections pointing to a downward trend in principal ETH withdrawals.

The Day Ahead

ETH staking statistics and the withdrawal profile actuals and projections will need monitoring. A rise in ETH staking inflows and a return to a net surplus balance between deposits and withdrawals would be ETH-positive.

Beyond the staking statistics, the crypto news wires will also influence. SEC v Ripple case chatter and Binance and Coinbase (COIN)-related news will need consideration. US regulatory activity and lawmaker chatter will also move the dial as investors begin to consider the Fed.

A US banking crisis and a deteriorating macroeconomic environment could force the Fed to signal a post-May pause on interest rate hikes.

Overnight, news hit the wires that US regulators are attempting to avert a banking crisis by selling First Republic Bank (FRC) to a large US bank. JP Morgan Chase (JPM) is reportedly the front-runner.

As fears of a recession grow, economic data from China drew interest this morning. The NBS Manufacturing PMI fell from 51.9 to 49.2, with the Non-Manufacturing PMI declining from 58.2 to 56.4. The contraction in the manufacturing sector was significant, with the post-COVID recovery running out of steam.

Ethereum Price Action

At the time of writing, ETH was down 0.51% to $1,899. A range-bound start to the day saw ETH fall from an early high of $1,909 to a low of $1,895.

ETH Technical Indicators

Resistance & Support Levels

ETH needs to move through the $1,904 pivot to target the First Major Resistance Level (R1) at $1,924. A move through the Saturday high of $1,919 would signal a breakout session. However, ETH staking statistics and the broader crypto market must support a breakout.

In the event of an extended rally, the bulls would likely test the Second Major Resistance Level (R2) at $1,938 and resistance at $1,950. The Third Major Resistance Level (R3) sits at $1,972.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1,890 in play. However, barring another crypto market sell-off, ETH should avoid sub-$1,850. The Second Major Support Level (S2) at $1,870 should limit the downside. The Third Major Support Level (S3) sits at $1,836.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a more bearish signal. Ethereum sat below the 100-day EMA, currently at $1,909. The 50-day EMA pulled back from the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bearish signals.

A breakout from the 100-day EMA ($1,909) would support a move through R1 ($1,924) to target R2 ($1,938) and $1,950. However, a fall through the 50-day EMA ($1,899) would bring S1 ($1,890) and the 200-day EMA ($1,882) into view. A fall through the 50-day EMA would send a bearish signal.