The price of Ether (ETH) fell by about 6% to around $3,024 on April 30, the lowest level in more than a week. The cryptocurrency’s decline mirrored similar downward moves elsewhere in the cryptocurrency market, with net capitalization falling by about 4%.
The main factors contributing to the decline in Ether’s price include a lackluster response to Hong Kong’s newly launched cryptocurrency-pegged spot exchange-traded funds (ETFs) and expectations of a hawkish stance from the Federal Reserve. The six cryptocurrency ETFs launched in Hong Kong on Tuesday performed significantly poorly, with a total trading volume of only $11 million, far below the expected $100 million. Of these, the Bitcoin ETF generated $8.5 million, and the rest were Ethereum ETFs.
This performance is in stark contrast to the $655 million in first-day trading volume of the U.S. spot BTC ETF launched on January 11. Since its launch, nearly a dozen such ETFs have attracted nearly $12 billion in investor funds. However, recent inflows have slowed, hindering Bitcoin’s upward trend and dragging down positively correlated cryptocurrencies such as Ether.
Ethereum's price drop today appears to be due to concerns that the Federal Reserve may stick to its hawkish message at the May 1 Federal Open Market Committee meeting. According to CME data, expectations for rate cuts have been pushed back to later in 2024, with investors currently predicting no more than two rate cuts by the end of the year. This adjustment is largely attributed to persistent inflation and a lagging U.S. economy.
Cryptocurrency markets have fallen ahead of recent Federal Open Market Committee (FOMC) meetings, suggesting that investors are more cautious. For example, ahead of the March FOMC meeting, market valuations fell by more than 10%, and ahead of the January meeting, market valuations fell by about 5%. In response, top tokens such as Bitcoin and Ethereum fell.
This behavior illustrates how investors adjust their positions to manage risk in response to expected changes in monetary policy. ETH/USD Bull Flag Correction, Ethereum's price drop today is part of a downtrend that occurs within a bull flag pattern. A bull flag pattern occurs in an uptrend when prices consolidate after a strong rise. This consolidation has formed a descending parallel channel as the price has made lower highs and lower lows.
As of April 30, ETH price has begun to pull back after hitting the bull flag’s upper trendline earlier this week, and it is expected that it may fall to the lower trendline around $2,760 in May. This lower trendline coincides with the 200-day exponential moving average (blue wave) and a significant resistance level from January 2024. However, when the price decisively breaks through the upper trendline, the bull flag is completed, which usually causes the initial rally to continue. The expected rise after the breakout is usually proportional to the height of the previous uptrend.
That is, if the bull flag plays out as expected, ETH price could rise to $5,250 by June, a 75% increase from current price levels.
