Cryptocurrencies soared after weak US data raised hopes the Fed could cut interest rates in September.
Investors eye tomorrow's nonfarm payrolls data for further confirmation, hoping a soft number will fuel gains.
Against this backdrop, Ethereum is currently at a crossroads and could break higher depending on the news flow.
Cryptocurrencies started the new week on a positive note, breaking out of the price range they have been stuck in since late May. This partial recovery can be traced to weak US economic data, fueling speculation that the Federal Reserve could begin cutting interest rates in September.
The data showed a slowdown in the labor market and manufacturing sector. While the services sector remained strong, highlighting persistent inflationary pressures, the weak numbers suggest the Fed may be more cautious about raising interest rates.
Investors are now eagerly awaiting tomorrow's non-farm payrolls data, a key indicator that could further influence the Fed's decision later this month. A decline in the jobs number could significantly boost the cryptocurrency market's upward momentum.
Adding to the bullish sentiment, Bitcoin, the dominant cryptocurrency, has seen increased institutional investment thanks to the launch of spot ETFs (exchange-traded funds). This increased demand for Bitcoin has also had a positive impact on altcoins.
Ethereum, a major altcoin that has the potential to impact the entire market, has its own story to tell alongside this broader market movement. Cryptocurrency traders are eagerly awaiting news of the launch of an Ethereum spot ETF, which could spark significant new investment and potentially lead to more volatile Ethereum trading in the near future.
Weak news flow on this front this week has dampened enthusiasm, but any positive developments regarding an Ethereum ETF in the coming days could have a significant impact on the cryptocurrency’s price. The combination of these factors — weak economic data, a potential delay in interest rate hikes, and anticipation of Ethereum spot ETFs — paints a picture of a cryptocurrency market poised for continued growth and potentially increased volatility.
Technical View: Is Ethereum Ready for a Breakout?
Ethereum (ETH) is currently facing a key resistance zone around $3,835, as seen on the daily chart. This level has held throughout June, with price action fluctuating between this resistance and the 8-day EMA.
However, the bullish signal comes from the Stochastic RSI indicator. After falling into oversold territory during the recent consolidation, the Stoch RSI indicator has now started to rise. This suggests a potential recovery for #ETH especially if it sustains a clear weekly close above the $3,835 resistance zone.
In May, the Stoch RSI had a similar oversold reading before the price#ETH increased significantly. This increase coincided with news of the SEC’s first approval of a spot Bitcoin ETF.
Positive news flow could be the main catalyst for ETH to break above the current resistance and reach the next hurdle near $4,100. A return of buying volume at this level would further strengthen the bullish momentum.
Looking beyond the immediate resistance, a potential bullish setup could emerge if ETH establishes support around $4,100. This could pave the way for a move towards Fibonacci extension levels, potentially pushing ETH into the $4,400-$4,800 region.
On the downside, $3,800 remains a key support level. A drop below this level due to market volatility could send ETH to $3,610. A breach of this floor could invalidate the bullish setup and trigger a move down to $3,300, likely driven by negative news events.
Overall, Ethereum is at a crossroads. A breakout above $3,835, coupled with positive news and increased buying pressure, could push ETH higher. However, a breakdown below $3,800 and negative news flow could lead to a significant decline.
