ETH Bears Target Sub-$1,850 on Jump in Principal Withdrawals

Key Insights:

• It was a bearish Wednesday session, with ETH sliding by 8.08% to end the day at $1,935.
• Staking statistics and the market reaction to UK and Euro Area inflation figures sent ETH to sub-$2,000 for the first time in six sessions.
• The technical indicators turned bearish, signaling a return to sub-$1,900.

Ethereum (ETH) tumbled by 8.08% on Wednesday. Reversing a 1.40% gain from Tuesday, ETH ended the day at $1,935. Significantly, ETH fell to sub-$2,000 for the first time in six sessions.

A mixed start to the day saw ETH rise to a first-hour high of $2,106 before hitting reverse. Falling short of the First Major Resistance Level (R1) at $2,136, ETH fell to a late low of $1,923. ETH fell through the Major Support Levels to end the session at $1,935.

Staking Statistics and European Stats Send ETH South

According to CryptoQuant, staking inflows fell from 81,760 ETH on Tuesday to 74,528 on Wednesday. Despite the decline, staking inflows remained elevated, a bullish price signal.

Total value staked figures also delivered bullish signals, rising through Wednesday and this morning despite the Wednesday sell-off.

However, a shift in the actual and projections for the ETH withdrawal profile weighed on investor sentiment.

According to TokenUnlocks, total pending withdrawals stood at 0.829 million ETH, equivalent to approximately $1.64 billion. Significantly, the withdrawal profile was bearish, with TotalUnlocks  showing a sharp rise in principal withdrawals and projecting elevated principal withdrawals today.

While the withdrawal projection is bearish, elevated staking inflows and an upward trend in total value staked would limit the impact of withdrawals on ETH. However, a sharp fall in inflows coupled with the increase in principal ETH withdrawals would be a bearish price scenario.

Despite the continued upward trend in total value staked, UK and euro area inflation figures sent ETH and the broader crypto market deep into negative territory. Fears of more aggressive policy moves to tame inflation weighed on buyer appetite.

The Day Ahead

Investors should continue monitoring ETH staking statistics and withdrawal profile actuals and projections. A continued upward trend in principal withdrawals and a downward trend in staking inflows would be a bearish signal.

Updates from the ongoing SEC v Ripple case and Binance and Coinbase (COIN)-related news will also need consideration.

US economic indicators and FOMC member commentary will move the dial this afternoon. Philly Fed Manufacturing Index and jobless claims figures will be in focus, with FOMC members Bowman and Waller delivering speeches.

Hawkish chatter would test buyer appetite. On Friday, FOMC member Christopher Waller saw the need for more interest rate hikes, leading to a jump in the probability of a 25-basis point Fed interest rate hike in May.

Ethereum Price Action

At the time of writing, ETH was up 0.86% to $1,952. A mixed start to the day saw ETH fall to an early low of $1,929 before rising to a high of $1,955.

ETH Technical Indicators

Resistance & Support Levels

ETH needs to move through the $1,988 pivot to target the First Major Resistance Level (R1) at $2,053. A return to $2,000 would signal a breakout session. However, the crypto news wires and staking statistics need to support a breakout.

In the event of an extended rally, the bulls would likely test resistance at the Wednesday high of $2,106 but fall short of the Second Major Resistance Level (R2) at $2,171. The Third Major Resistance Level (R3) sits at $2,354.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1,870 in play. However, barring another crypto market sell-off, ETH should avoid sub-$1,850 and the Second Major Support Level (S2) at $1,805. The Third Major Support Level (S3) sits at $1,622.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. Ethereum sat below the 100-day EMA, currently at $1,968. The 50-day EMA closed in on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bearish signals.

A move through the 100-day ($1,968) and 50-day ($2,025) would support a breakout from R1 ($2,053) to give the bulls a run at the Wednesday high of $2,106. However, failure to move through the 100-day EMA ($1,068) would leave the 200-day EMA ($1,882) and S1 ($1,870) in view. A move through the 50-day EMA would send a bullish signal.