Advertisement
Advertisement

ETH Bulls Eye a Return to $1,900 on Staking Stats and US PPI Numbers

By:
Bob Mason
Updated: May 11, 2023, 09:45 UTC

It is a busy day ahead for ETH. US economic indicators and central bank chatter will influence. However, another jump in staking inflows would be bullish.

ETH Tech Analysis - FX Empire.

In this article:

Key Insights:

  • On Wednesday, ETH extended the losing streak to five sessions, falling 0.27% to end the day at $1,843.
  • US Lawmaker rhetoric overshadowed bullish staking statistics. Investor sentiment toward the Fed also weighed on buyer appetite.
  • The technical indicators remained bearish, signaling a return to sub-$1,750.

Ethereum (ETH) fell by 0.27% on Wednesday. Following a 0.05% loss on Tuesday, ETH ended the day at $1,848. Significantly, ETH extended the losing streak to five sessions and returned to sub-$1,800 for the first time since April 26.

After a range-bound morning, ETH rallied to an early afternoon high of $1,889. ETH broke through the First Major Resistance Level (R1) at $1,863 and the Second Major Resistance Level (R2) at $1,879 before hitting the reverse.

The reversal saw ETH fall to a late afternoon low of $1,790. ETH fell through the First Major Support Level (S1) at $1,832 and the Second Major Support Level (S2) at $1,817 before bouncing back to end the session at $1,843.

Softer US Inflation Delivered Support Amidst a Bearish Backdrop

US economic indicators supported a mid-session rally on Wednesday.

In April, the US core annual inflation rate softened from 5.6% to 5.5%, with headline inflation easing from 5.0% to 4.9%. Economists forecast the headline inflation rate to hold steady at 5.0%.

ETH and the broader crypto market responded positively to the CPI Report despite inflation being too high and reducing the chances of a 2023 interest rate cut.

According to the CME FedWatch Tool, the probability of a 25-basis point June interest rate hike fell from 21.2% to 5.0% in response to the CPI Report. However, the chances of a June rate cut remained at 0%.

However, the upside was short-lived, with easing bets on a Fed rate cut and anti-crypto rhetoric on Capitol Hill testing buyer appetite.

On Wednesday, the Financial Services Committee held a hearing on regulatory gaps in digital asset market structure. Investors responded negatively to the hearing, with the Democrats continuing to take the anti-crypto position.

While the anti-crypto rhetoric weighed on investor sentiment, staking statistics cushioned the downside.

According to CryptoQuant, staking inflows surged from 103,296 ETH on Tuesday to 206,656.

Staking inflows surge.
ETH Staking Inflows 110523

The total value-staked continued rising despite the bearish Wednesday session.

Total value staked climbed higher.
Total Value Staked 110523

Overnight, the withdrawal profile was bearish. Principal ETH withdrawals spiked again. Projections for the morning session remained bearish, with principal ETH withdrawals expected to remain elevated.

Despite the bearish withdrawal profile, the surge in staking inflows supported a jump in the staking balance. On Wednesday, the net ETH staking balance stood at a surplus of 120,070 ETH, equivalent to $221.42 million. Deposits totaled 126,990 ETH versus withdrawals of 6,920 ETH.

According to TokenUnlocks, total pending withdrawals stood at 0.138 million ETH, equivalent to approximately $0.254 billion.

Withdrawal Profile is bearish.
ETH Withdrawal Profile – 110523

The Day Ahead

ETH staking statistics and the withdrawal profile will continue to provide direction. Withdrawal projections are bearish for the morning session, with principal ETH withdrawals rising to above-normal levels. However, staking inflows and the US economic calendar must support an ETH return to $2,000.

US wholesale inflation and jobless claims will be in focus this afternoon. Softer inflation figures and rising jobless claims should support ETH and the broader market.

Investors should also monitor the net balance on TokensUnlock, with a return to a net surplus being a bullish price signal.

However, the crypto news wires will continue to influence. Court rulings from the SEC v Ripple case will move the dial, with Binance and Coinbase (COIN)-related news needing consideration.

Ethereum Price Action

At the time of writing, ETH was down 0.50% to $1,833. A mixed start to the day saw ETH rise to an early high of $1,844 before falling to a low of $1,823.

ETH sees red.
ETHUSD 110523 Daily Chart

ETH Technical Indicators

Resistance & Support Levels

R1 – $ 1,891 S1 – $ 1,792
R2 – $ 1,940 S2 – $ 1,742
R3 – $ 2,039 S3 – $ 1,643

ETH needs to move through the $1,841 pivot to target the First Major Resistance Level (R1) at $1,891. A move through the Wednesday high of $1,889 would signal a breakout session. However, staking statistics and the crypto news wires must support a breakout.

In the event of an extended rally, the bulls would likely test the Second Major Resistance Level (R2) at $1,940. The Third Major Resistance Level (R3) sits at $2,039.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1,792 in play. However, barring another crypto market sell-off, ETH should avoid sub-$1,700. The Second Major Support Level (S2) at $1,742 should limit the downside. The Third Major Support Level (S3) sits at $1,643.

ETH support levels in play below the pivot
ETHUSD 110523 Hourly Chart

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 $1,871. The 50-day EMA pulled back from the 200-day EMA, with the 100-day EMA closing in on the 200-day EMA, delivering bearish signals.

An ETH move through the EMAs would support a breakout from R1 ($1,891) to target R2 ($1,940). However, failure to move through the 50-day EMA ($1,871) would leave S1 ($1,792) in view.

A breakout from the 50-day EMA ($1,871) would send a bullish signal.

EMAs are bearish.
ETHUSD 110523 4 Hourly Chart

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

Did you find this article useful?

Advertisement