ETH Bears to Target Sub-$1,750 with Fed Chair Powell in Focus

Key Insights:

• On Thursday, ETH joined the broader crypto market in the red, falling by 1.21% to end the day at $1,801.
• Staking statistics and sentiment toward the Fed overshadowed optimism toward reaching a US debt ceiling deal.
• The technical indicators remained bearish, signaling a return to sub-$1,700.

Ethereum (ETH) fell by 1.21% on Thursday. Following a 0.11% loss on Wednesday, ETH ended the day at $1,801. The bearish session left ETH short of the $1,850 handle for the eighth consecutive session.

A mixed start to the day saw ETH rise to a mid-morning high of $1,832. Falling short of the First Major Resistance Level (R1) at $1,845, ETH fell to a late afternoon low of $1,771. ETH briefly fell through the First Major Support Level (S1) at $1,792 before a partial recovery to end the day at $1,801.

Hawkish Fed Chatter and Withdrawals Trends Weighed

According to CryptoQuant, staking inflows increased from 118,176 ETH on Wednesday to 183,584 on Thursday. While staking inflows increased for a second session, inflows came up short of the 200,000 level.

The total value continued climbing higher, supported by ETH staking inflows.

However, the withdrawal profile was bearish. Overnight, principal withdrawals were higher than usual, which likely impacted buyer appetite. Withdrawal projections for the morning session were also bearish, with principal ETH withdrawals expected to spike.

A sharp increase in principal withdrawals and a slide in staking inflows would deliver another bearish session. On Thursday, the net ETH staking balance fell from a surplus of 138,510 ETH to 104,140, equivalent to $188.89 million. Deposits totaled 127,120 ETH versus withdrawals of 22,990 ETH.

According to TokenUnlocks, total pending withdrawals stood at 81,810 ETH, equivalent to approximately $143.37 million. Notably, the staking APR stood at 8.70%, up 4.02%.

While the staking statistics and withdrawal profile tested buyer appetite, progress towards a US debt ceiling deal provided support. However, better-than-expected US economic indicators and hawkish Fed chatter were headwinds.

FOMC member Lorie Logan suggested the latest economic indicators do not support a pause on interest rate hikes.

According to the CME FedWatchTool, the probability of a 25-basis point June interest rate hike stood at 36.2%, up from 10.7% on May 11. The chances of a 25-basis point interest rate cut stood at 0.0%, unchanged from one week earlier.

The Day Ahead

It is a relatively busy day for ETH, with the Fed in focus this afternoon. FOMC members Williams and Bowman will set the stage for Fed Chair Powell to wrap up the week.

Sticky inflation and tight labor market conditions support a bullish Fed policy outlook, which would weigh on ETH and the broader crypto market.

Staking statistics and the withdrawal profile will continue to influence buyer appetite. A further rise in ETH staking inflows and a wider net staking surplus would support a bullish session.

However, US debt ceiling-related news and the crypto news wires must support a bullish session. SEC v Ripple Court rulings will move the dial, with Binance and Coinbase (COIN) also in the spotlight.

Ethereum Price Action

This morning, ETH was up 0.06% to $1,802. A range-bound start to the day saw ETH rise to an early high of $1,808 before falling to a low of $1,797.

ETH Technical Indicators

Resistance & Support Levels

ETH needs to avoid the $1,801 pivot to target the First Major Resistance Level (R1) at $1,832. A breakout from $1,810 would signal a breakout session. However, ETH staking statistics, Fed commentary, and US debt ceiling updates must support a bullish session.

In the event of an extended rally, the bulls would likely test the Second Major Resistance Level (R2) at $1,862 and resistance at $1,900. The Third Major Resistance Level (R3) sits at $1,923.

A fall through the pivot would bring the First Major Support Level (S1) at $1,771 into play. However, barring a risk-off-fueled sell-off, ETH should avoid sub-$1,750 and the Second Major Support Level (S2) at $1,740. 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 50-day EMA, currently at $1,819. The 50-day EMA eased back from the 100-day EMA, with the 100-day EMA falling back from the 200-day EMA, delivering bearish signals.

A move through the 50-day EMA ($1,819) would support a breakout from R1 ($1,832) and 100-day EMA ($1,837) to target the 200-day EMA ($1,852) and R2 ($1,862). However, failure to move through the 50-day EMA ($1,819) would leave S1 ($1,771) in view.

A move through the 50-day EMA would send a bullish signal.