ETH Bears Target $1,750 as Recession Jitters and Fed Fear Grow

Key Insights:

• On Monday, ETH joined the broader crypto market in the red, falling by 2.14% to end the day at $1,831.
• ETH staking statistics, US economic indicators, and First Republic Bank news weighed on investor sentiment.
• The technical indicators are bearish, signaling a return to $1,800.

Ethereum (ETH) fell by 2.14% on Monday. Following a 1.99% loss on Sunday, ETH ended the day at $1,831. Despite the bearish session, ETH avoided sub-$1,800 for the fifth consecutive session.

A bullish start to the day saw ETH rise to a first-hour high of $1,887. Falling short of the First Major Resistance Level (R1) at $1,919, ETH fell to a late low of $1,806. ETH fell through the First Major Support Level (S1) at $1,845 and briefly through the Second Major Support Level (S2) at $1,820 before ending the day at $1,831.

Recession Fears and First Republic Bank Weigh

News of JP Morgan Chase (JPM) acquiring the assets of First Republic Bank (FRC) weighed on ETH and the broader crypto market. The threat of another US bank collapse had driven demand for cryptos before the Monday announcement.

US economic indicators added to the bearish mood, with the latest stats fueling recessionary jitters.

In April, the ISM Manufacturing PMI rose from 46.3 to 47.1. The key takeaways from the ISM survey included sharp increases in the employment and prices sub-components. The ISM Manufacturing Employment Index jumped from 46.9 to 50.2, with the Prices Index up from 49.2 to 53.2.

The latest US stats favored the Fed hawks, weighing on ETH and the broader market.

According to the CME FedWatch Tool, the probability of a 25-basis point May interest rate hike rose from 83.9% to 93.2% in 24 hours. Significantly, the chances of a 25-basis point June interest rate hike increased from 23.9% to 27.7%.

ETH Staking and Withdrawal Continued to Test Buyer Appetite

Staking statistics and the withdrawal profile delivered another bearish session.

According to CryptoQuant, staking rose from 31,872 ETH on Sunday to 58,272 on Monday. Despite the increase, staking inflow levels remained below post-Shapella upgrade weekday levels.

However, total value-staked resumed an upward trend supported by the pickup in staking inflows.

Overnight, the withdrawal profile turned more bullish. While there was a spike in principal ETH withdrawals, the projections signal a return to a more normal withdrawal profile.

On Monday, the net staking balance stood at a surplus of 20,960 ETH, equivalent to $39.90 million. Deposits stood at 41,200 ETH, with withdrawals at 20,240 ETH.

According to TokenUnlocks, total pending withdrawals stood at 0.471 million ETH, equivalent to approximately $0.861 billion.

The Day Ahead

Investors should continue monitoring the ETH staking statistics and the withdrawal profile actuals and projections. Recessionary jitters and Fed Fear could impact staking levels mid-week.

However, a rise in ETH staking inflows and a net surplus balance between deposits and withdrawals would be ETH-positive.

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

This afternoon, US JOLTs job openings and factory orders will be in focus. With the Fed in action tomorrow, we expect the JOLTs job openings to draw more interest. A slide in the quit rate would signal deteriorating labor market conditions and ease pressure on the Fed to deliver a hawkish interest rate hike.

Away from the economic calendar, US corporate earnings will also influence market risk sentiment. Big names on the US earnings calendar include Pfizer Inc. (PFE), Starbucks Corp. (SBUX), and Ford Motor Co (F).

Ethereum Price Action

At the time of writing, ETH was down 0.21% to $1,828. A range-bound start to the day saw ETH rise to an early high of $1,837 before falling to a low of $1,824.

ETH Technical Indicators

Resistance & Support Levels

ETH needs to move through the $1,841 pivot to target the First Major Resistance Level (R1) at $1,877 and the Monday high of $1,887. A return to $1,850 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 $1,922 and resistance at $1,950. The Third Major Resistance Level (R3) sits at $2,003.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1,796 in play. However, barring another crypto market sell-off, ETH should avoid sub-$1,750. The Second Major Support Level (S2) at $1,760 should limit the downside. The Third Major Support Level (S3) sits at $1,679.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. Ethereum sat below the 200-day EMA, currently at $1,880. The 50-day EMA converged on the 200-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bearish signals.

A breakout from R1 ($1,877) and the 200-day ($1,880) and 50-day ($1,884) EMAs would support a move through the 100-day EMA ($1,899) to target R2 ($1,922) and $1,950. However, a bearish cross of the 50-day EMA through the 200-day EMA would bring S1 ($1,796) into view. A move through the 50-day EMA would send a bullish signal.