Ethereum price knee-jerk reaction to Tuesday’s better-than-expected Consumer Price Index (CPI) data was not strong enough to weaken the seller congestion at $1,800. However, ETH’s brief rebound touched highs of $1,760 followed by a minor but sharp dip which confirmed the viability of support at $1,730.
The token powering the largest smart contracts ecosystem is currently trading at $1,738 while bulls battle a seemingly strengthening bearish grip.
With support at $1,700 staying intact coupled with building optimism ahead of the United States Federal Open Market Committee (FOMC) meeting later on Wednesday, Ethereum price could embark on an upward trajectory targeting $1,800 and $2,000 price points, respectively.
Can US Fed Rate Decision Trigger Ethereum Price Rally?
According to this analysis of Bitcoin Price, investor confidence received a boost following the release of the CPI report, which revealed a year-on-year inflation deceleration to 4.9% in April, modestly undercutting the predictions made by market watchers interviewed by Dow Jones survey.
Later today, the FOMC meeting will decide whether to pause interest rate hikes, which have been maintained since Q1 2022. There is a higher probability of a pause following earlier communication by the Fed. About 76% of market participants, according to CoinDesk, believe the regulator will discontinue the historic interest rate hikes.
“Inflation is coming down, just as the Fed intended, and that’s easing fears about the economy’s future,” Callie Cox, an analyst trading firm eToro told CNBC. “Lower inflation also supports the case for the end of rate hikes, and higher rates are what started the crypto winter over a year ago.”
As the Fed ponders ending rate hikes, optimism is expected to build among investors. Risky asset classes like Bitcoin and Ethereum are expected to benefit the most from the “easing of tight liquidity conditions,” Cox added.
Ethereum Price Settles For Consolidation
Ethereum price has been stuck between a rock and a hard place since the SEC-triggered sell-off last week. On the downside, support at $1,730 appears robust enough to keep bears in check.
However, it has become a daunting task for bulls to deal with resistance at $1,760. If the buy signal from the Moving Average Convergence Divergence (MACD) indicator stays put on the four-hour timeframe chart, the probability for a breakout above $1,800 would remain high.
Remember, bulls are at a disadvantage now that ETH is trading below all the major applied moving averages, including the 200-day EMA (purple), the 100-day EMA (blue), and the 50-day EMA (red).
If push comes to shove and declines extend below $1,730, investors can start acclimatizing to increased overhead pressure and subsequent losses to $1,700 and $1,600, respectively.
Ethereum On-chain Activity Steadies
Intriguingly, some key on-chain metrics have remained steady despite last week’s capitulation. Having achieved a record peak in May, the momentum of staking activities within the Ethereum network has extended its upward trajectory into June 2023.
Glassnode’s ‘Supply in Smart Contracts’ metric offers insights into staking dynamics by gauging the share of the overall circulating ETH currently committed to various protocols.
In the period spanning from June 1 to June 12, cryptocurrency enthusiasts have further committed an additional 360,000 ETH to the Ethereum Beacon chain and DeFi smart contracts.
The spike in Ether held in staking contracts shrinks available supply on exchanges, thus reducing selling pressure. If this fundamental factor holds, Ethereum price may ignite an uptrend in the short term.
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Source: https://coingape.com/ethereum-price-prediction-as-eth-sits-on-1700-support-how-to-stay-profitable-this-week/