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Ethereum (ETH) Price Analysis: What to Expect Ahead of US Fed Rate Decision

By:
Ibrahim Ajibade

Ethereum on-chain data shows that investors have cooled their buying pressure ahead of the US CPI and Fed Rate decision. Can ETH price stay above $2,000?

Ethereum (ETH) Price Analysis

In this article:

Insights: 

  • Ethereum (ETH) experienced tepid price action on Monday, Dec 11 as the investors brace up for the next US Fed Interest rate decision. 
  • Ethereum’s Coinbase Premium Index has flipped negative, indicating that large investors have cooled their buying pressure. 
  • Historical capital flow trends identify the $2,100 support area as a historically significant accumulation zone. 

Ethereum (ETH) experienced tepid price action on Monday as the investors brace up for the next US inflation CPI data and the FOMC Interest rate decision slated for December 13. On-chain data trends reveal that large crypto investors have cooled their buying pressure. 

As the bears capitalize on the market waning market momentum, where will ETH price find support in the short term? 

Whale Investors Have Cooled their Buying Pressure Ahead of FOMC Meeting 

Ethereum price reached a new 2023 peak of $2,403 on Saturday Dec 9, but has since entered a 10% retracement, tumbling toward the $2,156 on Monday. The recent price correction has been attributed to investors taking on a subdued trading disposition ahead of the much-anticipated Fed Rate announcement. 

While Bitcoin (BTC) and Ethereum (ETH) prices, slid on Monday, the S&P 500 and Gold (XAU) also recorded signficant pull-backs. 

With next FOMC meeting is billed for Wednesday Dec 13, the Ethereum whale investors (corporate entities and high net-worth investors) appear to have taken on a more subdued approach. 

According to CryptoQuant, US-based institutional investors have started cooled buying pressure on Monday. Indicatively, the chart below shows that on Sept 13, the Coinbase Premium Index hit -0.004%, breaking into negative values, for the only the 6th time in the last 58 trading days. 

 Ethereum (ETH) Price vs. Coinbase Premium Index. Source: CryptoQuant
Ethereum (ETH) Price vs. Coinbase Premium Index. Source: CryptoQuant

CryptoQuant’s Coinbase Premium Index, shows the percentage difference between spot prices on Coinbase Pro and Binance exchanges. It is an important on-chain metric for tracking the real-time changes in the trading sentiment among crypto whales. 

While Binance dominates the retail spot market globally, while Coinbase Pro is dominated by US-based institutional entities and high net-worth investors looking to trade in a more regulated environment. 

When the average of ETH prices quoted on Coinbase falls below Binance prices, the Coinbase Premium Index reads negative values, indicating that there’s more crypto whales’ trading activity has fallen short. 

In effect, ETH Coinbase Premium Index swinging into negative values on Monday, suggests the large investors have cooled their buying pressure ahead of the Fed rate decision.  

Notably, the last time the Coinbase index broke spent two consecutive trading days in negative values was back in mid-October. Hence, the trend persists, ETH could experience further downswing on Tuesday. 

Forecast: Can ETH Price Stay Above $2,000?

Ethereum price looks set to defend the $2,000 support, based on the historical accumulation trends. 

Also, the boisterous November Non-Farm Payrolls data, and cooling inflation CPI over the past few months have fed into an overall expectation that the Federal Reserve is unlikely to raise interest rates on Wednesday.

If this scenario plays out, the crypto bulls could return to action in the days ahead. 

The Global In/Out of the Money (GIOM) data, which groups the current ETH holders according to their entry prices, also confirms this optimistic ETH price outlook. 

It however, shows that the bears face significant obstacle at the  $2,050. As depicted below, 1.78 million current holders had acquired 35.662 million ETH coins at the average price of $2,053. 

Ethereum (ETH) Price Analysis | IOMAP data | Source: IntoTheBlock
Ethereum (ETH) Price Analysis | IOMAP data | Source:IntoTheBlock

If those investors defend their positions in expectation of a positive FOMC rate decision,  Ethereum price could avoid a drop below $2,000.

On the upside, the bulls could regain control of the market if ETH price can reclaim the $2,400 territory.But, as observed on Dec 9, the 558,460 holders that bought 578,570 ETH at the average price of $2,410 could post a major resistance in the short-term.

About the Author

Ibrahim Ajibade Ademolawa is a seasoned research analyst with a background in Commercial Banking and Web3 startups, specializing in DeFi and TradFi analysis. He holds a B.A. in Economics and is pursuing an MSc in Blockchain.

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