By John Isige
The world’s second-largest cryptocurrency, Ethereum, barely holds above water amid a delicate situation in the market. Investors are patiently waiting for the Federal Reserve's decision on interest rates.
Some experts believe the expected 0.25% hike in interest rates has been factored in, with Ethereum's price and other cryptocurrencies likely to remain unchanged.
For the moment, Ethereum price teeters at $1,575 while bulls focus on dealing with resistance at $1,600. On the downside, support at $1,520 must be defended at all costs to avert possible declines to $1,445 and $1,400, respectively.
Over $7 billion in trading volume has been recorded in the 24 hours leading to this analysis, although ETH price has only changed by +0.15%. The sell-off in the market since the weekend has resulted in a drop in the token’s market cap from $202 billion on January 29 to $192 billion.
Ethereum Price Exhibits Stability Ahead of FOMC
The largest smart contracts token remains relatively stable despite the drop from January’s high, roughly at $1,678. Investors have retreated to the sidelines, awaiting the Fed decision on a likely interest rate hike of 25 basis points. The first US FOMC meeting concluding later today would either keep New Year’s crypto upswings steady, stifle recovery, or culminate in a short-term selloff.
According to an analysis carried out by Lookonchain on how ETH reacted after eight FOMC meetings in 2022, investors can expect Ethereum price to jump by up to 4.25% with 0.25% being the lowest expected change.
Ethereum price sits comfortably above critical support provided by the 200-day Exponential Moving Average (EMA) (in purple) at $1,517. However, the Moving Average Convergence Divergence (MACD) indicator has recently flaunted a sell signal, hinting at a longer trend correction in the coming days.
Traders must follow the position of the MACD line in blue as it builds a divergence below the signal line in red. Declines may intensify if the momentum indicator drops to the mean line and possibly revisits the negative region. The red histograms in the same indicator reinforce the growing bearish advances.
Assessing The Bullish Outlook in Ethereum Price – Short Analysis
The Money Flow Index (MFI) on the same daily timeframe chart reveals that investors are ready to pump money into Ethereum markets. We can see the MFI bouncing off the midline in the neutral zone following a major dip from the higher range of the overbought region. As long as more volume is flowing in than Ether’s total outflows, a trend rebound would be the most likely outcome.
In addition, to support provided by the 200-day EMA, the 50-day EMA (in red) has recently flipped above the 100-day EMA. Although not a golden cross pattern, which forms with the 50-day EMA moving above the 200-day EMA, it implies bulls hold the reins and Ethereum price will likely keep climbing.
Short-term analysis based on the four-hour time frame chart shows Ethereum holding between the 100-day EMA (in blue) and the 50-day EMA (in red) to the upside. While the most popular smart contracts token is trading below the dotted trend line, its support at the 100-day EMA has been reinforced by the lower rising trend line, which means odds still favor a bullish outcome.
Following the fall from January’s highs, Ethereum sunk into oversold conditions based on the Stochastic oscillator. However, recovery is already underway with bullish pressure gradually intensifying.
Therefore, with a minor push above the 50-day EMA and the dotted rising trendline, Ethereum price would reignite its uptrend, aiming for $1,800 and $2,000, respectively. The MFI indicator upholds the positive picture, as seen in the daily time frame analysis.
It would be prudent to assess the possibility of an extended trend correction, especially if support at the 100-day EMA on the four-hour chart weakens. From here, Ethereum will be forced to look toward the 200-day EMA (purple) at $1,486 for support. If push comes to shove, declines might retest the next buyer congestion area at $1,400.
Can This Upgrade Steady Ethereum Price Uptrend?
The Ethereum Merge upgrade set the ball rolling for many features expected on the proof-of-stake (Pos) blockchain, including Zhejiang – the staking testnet going live today. Users will for the first time, interact with the new staking protocol that allows the withdrawal of staked ETH.
According to the testnet’s developer, the Shanghai+Capella upgrade will be triggered in about six days from today. The testnet will allow developers to monitor the withdrawal process and other related services and resolve any potential issues that may arise.
The Ethereum community is waiting with bated breath for the launch of the Shanghai upgrade, schooled before the end of Q1 2023. This will be a notable hard fork as it will, for the first time, see investors withdraw ETH locked in the Beacon chain.
Experts believe the event will be a significant catalyst for Ethereum price and liquid staking platforms that allow investors to lock digital assets in smart contracts and still let them have access to their liquidity, such as LidoDAO.
The Shanghai upgrade will also open up opportunities for organizations and crypto exchanges that may utilize the staking feature to generate more income. A recent report by JP Morgan said that companies like Coinbase may unlock a $500 million annual revenue opportunity with the launch of the Shanghai upgrade.
Overall, Zhejiang will mark a new beginning for the Ethereum ecosystem and trigger a possible uptick in ETH price. The Shanghai upgrade may also trigger a spike in the prices of liquid staking platforms like LidoDAO.
