ETH Eyes Sub-$1,700 as US Debt Ceiling Woes Overshadows Staking Stats

Bob Mason
Published: May 12, 2023, 03:29 GMT+00:00

ETH was in the red this morning, with the bears targeting a seventh session loss on US debt ceiling woes. Staking inflows have surged, however.

ETH tech analysis - FX Empire

In this article:

Key Insights:

  • On Wednesday, ETH extended the losing streak to six sessions, falling 2.60% to end the day at $1,795.
  • Investor jitters over the US debt ceiling, the risk of a US government default, and a global economic recession weighed.
  • The technical indicators remained bearish, signaling a return to sub-$1,750.

Ethereum (ETH) fell by 2.60% on Thursday. Following a 0.27% loss on Wednesday, ETH ended the day at $1,795. Significantly, ETH extended the losing streak to six sessions and ended the day at sub-$1,800 for the first time since April 2.

A mixed start to the day saw ETH rise to an early high of $1,844. Falling short of the First Major Resistance Level (R1) at $1,891, ETH fell to a late afternoon low of $1,772. ETH fell through the First Major Support Level (S1) at $1,792 before ending the day at $1,795.

US Debt Ceiling and Global Economic Recession Jitters Weighed

It was a relatively busy Thursday session. US wholesale inflation and jobless claims provided brief relief. However, a lack of progress toward raising the US debt ceiling sent ETH and the broader crypto market into negative territory.

Economists expect a US Government default on payment obligations to send the US and global economies into recessions. Failure to raise the debt ceiling remains a bearish outcome for riskier assets.

However, staking statistics cushioned the downside.

According to CryptoQuant, staking inflows climbed higher on Thursday, rising from 206,656 ETH to 216,704.

Staking inflows climb higher.
ETH Staking Inflows 120523

The total value-staked continued rising despite the ETH return to sub-$1,800. The surge in staking inflows to the highest since November 2022 supported the upswing.

Total value staked accelerates.
Total Value Staked 120523

Overnight, the withdrawal profile was bullish. Principal withdrawals receded to normal levels. However, withdrawal projections for the morning session turned bearish, with principal ETH withdrawals expected to spike.

Despite the bearish withdrawal profile, the surge in staking inflows supported a jump in the staking balance. On Thursday, the net staking balance increased from a surplus of 120,070 ETH to a 199,119 ETH surplus, equivalent to $368.16 million. Deposits totaled 220,820 ETH versus withdrawals of 21,810 ETH.

According to TokenUnlocks, total pending withdrawals stood at 0.125 million ETH, equivalent to approximately $0.222 billion.

Withdrawal profile turns bearish.
ETH Withdrawal Profile – 120523

The Day Ahead

ETH staking statistics and the withdrawal profile will draw interest. A jump in principal withdrawals and a sharp decline in staking inflows would be bearish.

However, US economic indicators, Fed commentary, and the US debt ceiling will influence. We expect US debt ceiling-related news to impact ETH and the broader crypto market more.

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 0.65% to $1,784. A mixed start to the day saw ETH rise to an early high of $1,802 before falling to a low of $1,779.

ETH sees red.
ETHUSD 120523 Daily Chart

ETH Technical Indicators

Resistance & Support Levels

R1 – $ 1,835 S1 – $ 1,763
R2 – $ 1,876 S2 – $ 1,732
R3 – $ 1,948 S3 – $ 1,660

ETH needs to move through the $1,804 pivot to target the First Major Resistance Level (R1) at $1,835 and the Thursday high of $1,844. A return to $1,800 would signal a breakout session. However, staking statistics and US debt ceiling-related news must support a breakout.

In the event of an extended rally, the bulls would likely test the Second Major Resistance Level (R2) at $1,876 and resistance at $1,900. The Third Major Resistance Level (R3) sits at $1,948.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1,763 in play. However, barring another risk-off-fueled sell-off, ETH should avoid sub-$1,700. The Second Major Support Level (S2) at $1,732 should limit the downside. The Third Major Support Level (S3) sits at $1,660.

ETH support levels in play below the pivot.
ETHUSD 120523 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 $1,858. The 50-day EMA pulled back from the 200-day EMA, with the 100-day EMA crossing through the 200-day EMA, delivering bearish signals.

A move through R1 ($1,835) would support a breakout from the 50-day EMA ($1,858) to target the 100-day ($1,875) and 200-day ($1,875) EMAs and R2 ($1,876). However, failure to move through the 50-day EMA ($1,858) would leave S1 ($1,763) in view.

A breakout from the 50-day EMA would send a bullish signal.

EMAs are bearish.
ETHUSD 120523 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.

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