ETH Bulls Eye $2,000 on Staking Inflow Surge and Debt Ceiling Deal
Key Insights:
- On Thursday, ETH joined the broader market in the red for a second session, falling by 0.64% to end the day at $1,862.
- However, it was a bullish start to Friday, with the US Senate passing the Debt Limit Suspension Bill.
- The technical indicators remain bullish, signaling a run at $2,000.
Ethereum (ETH) fell by 0.64% on Thursday. Following a 1.42% loss on Wednesday, ETH ended the day at $1,862. Significantly, ETH fell short of the $1,900 handle for the first time in five sessions.
A mixed start to the day saw ETH rise to a first-hour high of $1,889. Falling short of the First Major Resistance Level (R1) at $1,905, ETH fell to an early morning low of $1,840. ETH fell through the First Major Support Level (S1) at $1,845 before revisiting the $1,880 handle. However, a bearish end to the day left ETH at sub-$1,870 levels.
China PMIs and Fed Bets Fail to Deliver a Bullish Session
According to CryptoQuant, staking inflows surged from 99,808 ETH on Wednesday to an ATH of 404,704 on Thursday. The increase in ETH staking inflows came despite the bearish Thursday session.
The total value staked surged higher, supported by the increase in ETH staking inflows and the net staking balance.
The overnight withdrawal profile was bearish, with principal withdrawals rising above normal levels. However, withdrawal projections for the morning session turned bullish, with principal ETH withdrawals expected to return to below-normal levels.
On Wednesday, the net ETH staking balance increased by 5.78% to a surplus of 76,690 ETH, equivalent to $143.61 million. Deposits totaled 114,230 ETH versus withdrawals of 37,540 ETH.
According to TokenUnlocks, total pending withdrawals stood at 69,400 ETH, equivalent to approximately $130.90 million. Notably, the staking APR stood at 8.90%, up 1.48% over 24 hours.
US Economic Indicators Fuel Bets of a Fed Pause in June
ADP and jobless claims figures continued to signal tight labor market conditions. However, unit labor costs and sub-components of the ISM Manufacturing PMI fueled bets on a Fed pause in June.
According to the ADP, Nonfarm employment increased 278k in May versus a forecasted 170k rise. In April, nonfarm employment rose by 291k. Initial jobless claims also continued to signal tight labor market conditions.
However, unit labor costs fell short of forecasts, rising by 4.2% in Q1 versus 3.2% in Q4. Economists forecast a 6.3% increase. The US ISM Manufacturing PMI survey also supported a Fed pause. In May, the PMI fell from 47.1 to 46.9, with the ISM Manufacturing Prices Index tumbling from 53.2 to 44.2.
According to the CME FedWatch Tool, the chances of a 25-basis point interest rate hike fell from 26.4% to 20.4% on Thursday as investors responded to inflation and labor cost numbers.
Progress on Capitol Hill to avert a Monday US default supported riskier assets. However, the risk of a US default lingered, with the Democrats holding a thin majority of 51 to 49. The Bill needed 60 votes, which meant nine Republicans needed to vote in favor of the Bill.
The Day Ahead
It is a busy day for ETH. While there were no economic indicators from Asia to consider, the US Jobs Report will influence this afternoon. A more marked pickup in wage growth and a solid increase in nonfarm payrolls could test the ‘Fed Pause’ theory.
However, news of the US Senate passing the Debt Limit Suspension Bill with votes of 63-36 in favor delivered morning support.
Investors should continue to consider staking statistics and the withdrawal profile. A further increase in ETH staking inflows and a slide in ETH withdrawals would deliver a bullish session.
SEC v Ripple updates and Binance and Coinbase (COIN)-related news would also move the dial.
Ethereum Price Action
This morning, ETH was up 1.29% to $1,886. A mixed start to the day saw ETH fall to an early low of $1,848 before rising to a high of $1,889. The First Major Resistance Level (R1) at $1,887 capped the upside.
ETH Technical Indicators
Resistance & Support Levels
| R1 – $ | 1,887 | S1 – $ | 1,838 |
| R2 – $ | 1,913 | S2 – $ | 1,815 |
| R3 – $ | 1,962 | S3 – $ | 1,766 |
ETH needs to avoid the $1,864 pivot to break out from the First Major Resistance Level (R1) at $1,887 and the Thursday high of $1,889. A move through the morning high of $1,889 would signal a breakout session. However, ETH staking statistics and the crypto news wires must support a bullish session.
In the event of an extended rally, the bulls would likely test the Second Major Resistance Level (R2) at $1,913 and resistance at $1,950. The Third Major Resistance Level (R3) sits at $1,962.
A fall through the pivot would bring the First Major Support Level (S1) at $1,838 into play. However, barring a risk-off-fueled sell-off, ETH should avoid sub-$1,800. The Second Major Support Level (S2) at $1,815 should limit the downside.
Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. Ethereum sat above the 50-day EMA, currently at $1,861. The 50-day EMA pulled away from the 200-day EMA, with the 100-day EMA crossing through the 200-day EMA, delivering bullish signals.
A hold above the 50-day ($1,861) would support a breakout from R1 ($1,887) to target R2 ($1,913) and $1,950. However, a fall through the 50-day ($1,861) would bring the 100-day ($1,850) and 200-day ($1,849) EMAs and S1 ($1,838) into view.
A fall through the 50-day EMA would send a bearish signal.
