While all of the risky asset classes had been on a roll since the beginning of September, a new thunderclap struck following the latest inflation figures in the United States. Indeed, they turned out to be higher than expected, even though we thought that falling energy prices during the summer would tend towards a more substantial decline.
In reality, other non-energy components have been added to the maintenance of inflationary pressures, such as food, health and property rents. From cause to effect, the immediate reaction of the financial markets fell without appeal to the downside. Many investors have been caught off guard by thinking that the Fed was going to settle down. And logically, the pill was difficult for the cryptocurrency market to digest.
Besides, Ethereum, which has just validated its transfer to Proof of Stake (PoS), has again failed below the resistance of $1700. Although this is not definitive, a new failure below this critical threshold could jeopardize the technical rebound initiated since mid-June. With the fear of witnessing the fact that its bear market, since its last ATH in November 2021, could pick up where it left off.
Ethereum – Prices so far and so close to the descending line
The two bullish candles in weekly units from the support at $1400, had allowed us to maintain the hope that the prices of Ethereum could break the resistance of $ 1700 upwards. Unfortunately, when inflation was released in the United States in August, they abruptly reversed course.
Technically speaking, ETH prices are so far and so close to the descending line. To the point of giving the impression, near the latter, that the technical rebound from the low points of mid-June is reaching its limits. Because despite prices doubling, they barely caught up to the 38.2% Fibonacci retracement of the last wave of declines. This would prove that buying tendencies remain timid.
That being said, the MACD is not showing any weakness on its bullish path towards the zero line. And it’s one of the few consolation prizes that would eventually push for an extension of his technical rebound. Thereby, crossing $1700 could catapult ETH cryptocurrency prices past the descending line. But from there to foreseeing a real trend reversal, other obstacles could well moderate this optimistic scenario.
Ethereum – Unfavorable signals that converge in the short term
If, in weekly units, the threat of a recovery of the Ethereum market since its last ATH in November 2021 is not very visible, the daily chart offers us a finding that could invite caution. In effect, prices failed twice below the $1700 resistance. Especially since the first failure in mid-August was to serve as a warning. But buyers wanted to keep believing it until US inflation came back.
From now on, technical indicators could find themselves dragged below their respective fold lines. In this sense, it is possible to fear that the prices of ETH will suffer a blow from the sellers in the direction of the support of $1400. And in the event of a breach of this intermediate threshold, a return to the old triple bottom neck line around $1200 would be in sight.
But, imagining that the market context deteriorates dangerously, we would risk rekindle the ETH bear market rally. And so, the $1000 support would offer little resistance against the horde of sellers, who themselves had wisely hibernated during the summer period. In which case, a new wave of decline could definitely start towards the support of $700.
ETH – After The Merge, let’s get to the reality of the market!
Even if The Merge stage constitutes a historic turning point in the functioning of the Ethereum network, it is clear that this is not the case with the evolution of the prices of its cryptocurrency ETH. Because it’s still in a bear market until proven otherwise. Not only that, Weinstein’s phase 4 could play a bad trick again, as it did near the resistance of $3400. But also, Aggressive Fed Tightening Won’t Help Cryptocurrency Businesswhich remain vulnerable to market liquidity.
As long as the US central bank will continue to crack down on inflation, the altcoin market will suffer, with Ethereum at the forefront. And now that The Merge has passed, we momentarily see prices moving away from $1700, one of the major levels of the last bullrun. This would pave the way for a downward catch-up against Bitcoin. Hence the importance of keeping the $1400 support afloat in the immediate term to avoid this potential scenario.
Assuming Satoshi Nakomoto’s digital currency definitely breaks its year lows, large downward movements could be feared on Ethereum. And thus cause a loss of dominance of ETH over BTC, like what happened last spring.
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