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ETH Faces a Return to Sub-$1,700 as Focus Shifts to the Fed

By:
Bob Mason
Updated: Mar 21, 2023, 08:59 UTC

Ethereum falls 2.63% as easing bank contagion risk following the UBS-Credit Suisse deal supports equity markets, drawing investors away from cryptos.

Ethereum, FX Empire

In this article:

Key Insights:

  • On Monday, Ethereum (ETH) joined the broader market in negative territory, falling by 2.63% to end the day at $1,739.
  • Easing bank contagion risk supported a bullish European and US equity market session, leaving cryptos in the red.
  • However, the technical indicators remained bullish, leaving $2,000 in view.

Ethereum fell by 2.63%. Reversing a 1.25% gain from Sunday, ETH ended the day at $1,739.

A mixed start to the day saw ETH rise to a late morning high of $1,809 before hitting reverse. Falling short of the First Major Resistance Level (R1) at $1,834, ETH fell to a final-hour low of $1,729. ETH fell through the First Major Support Level (S1) at $1,750 to wrap up the day at $1,739.

UBS Agreement to Acquire Credit Suisse Bank Delivers a Bullish Sunday

Easing Bank Contagion Risk weighed on ETH as investors rotated out of cryptos into European and US equities.

While the Asian markets remained bearish on Monday, European and US markets showed relief at the news of UBS AG (UBS) agreeing to acquire Credit Suisse Group AG (CS).

There were no US economic indicators to spook investors ahead of Wednesday’s Fed interest rate decision and FOMC projections. Investors are betting on the Fed to lift interest rates by 25 basis points and signal rate cuts by the summer. While there has been chatter of the Fed standing pat, there is the outside chance of the Fed pushing ahead with an aggressive interest rate trajectory to curb inflation.

The NASDAQ Composite Index rose by 0.39% on Monday, with the Dow Jones and S&P 500 seeing gains of 1.20% and 0.89%, respectively.

From the crypto market, there were no events to influence market sentiment as investors look ahead to the Shapella upgrade.

Despite the bearish session, ETH staking inflows rebounded on Monday. According to CryptoQuant, staking inflows rose from 9,536 ETH on Sunday to 28,768 ETH on Monday, the highest ETH staking inflows since March 9 (35,552 ETH).

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The bounce back in staking inflows signals improved market conditions. A continued upward trend in ETH staking inflows would be a bullish sign for the Shapella upgrade.

The Day Ahead

This afternoon, there are no US economic indicators to test buyer appetite. The lack of stats will leave sentiment toward the Fed policy decision, banking sector-related news, and the crypto news wires to influence.

While we expect banking sector-related news to draw interest, investors should continue to monitor SEC v Ripple updates and Binance-related news.

Ethereum (ETH) Price Action

At the time of writing, ETH was up 0.41% to $1,747. A mixed start to the day saw ETH fall to an early low of $1,735 before rising to a high of $1,764.

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Technical Indicators

ETH needs to move through the $1,759 pivot to target the First Major Resistance Level (R1) at $1,789 and the Monday high of $1,809. A return to $1,800 would signal a breakout session. However, Shapella upgrades news and the crypto news wires should be ETH-friendly to support a breakout.

In the event of an extended rally, the bulls would likely test the Second Major Resistance Level (R2) at $1,839 and resistance at $1,900. The Third Major Resistance Level (R3) sits at $1,919.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1,709 in play. However, barring an event-fueled broad-based crypto market sell-off, ETH should avoid sub-$1,650. The Second Major Support Level (S2) at $1,679 should limit the downside. The Third Major Support Level (S3) sits at $1,599.

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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 $1,718. The 50-day EMA pulled further away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above the 50-day EMA ($1,718) would support a breakout from R1 ($1,789) to target R2 ($1,839) and $1,900. However, a fall through the 50-day EMA ($1,718) would give the bears a run at S1 ($1,709) and sub-$1,700 support levels. A fall through the 50-day EMA would send a bearish signal.

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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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