Ethereum price hovered around $3,100 on August 1, 2024, as markets reacted negatively to the US Federal Reserve rate pause. Here’s how ETH price could react in the coming weeks.
Reaction to Fed rate freeze sends ETH price soaring to $3,100
On July 31, the US Federal Reserve unanimously decided to keep the monetary policy interest rate unchanged in the range of 5.25% to 5.5%. This caused a negative reaction in risk markets, including stocks and cryptocurrencies, on Thursday.
Following the announcement, ETH gave up the gains made during the market euphoria caused by the ETF launch euphoria and Donald Trump’s comments last week. This week, the ETFs experienced a streak of 4 consecutive days of outflows.
Following the release of the latest non-farm payrolls (NFP) and consumer price index (CPI) data on July 5, many cryptocurrency investors expected the US Federal Reserve to cut interest rates for the first time on July 31.
Now that those hopes have been dashed, cascading liquidations in crypto markets have sent ETH prices soaring to $3,100. The chart above shows that ETH has fallen 15.08% since midday (ET) on August 1.
Meanwhile, the TOTAL3 chart shows that the global altcoin market has declined by less than 10% over the period. This clearly indicates that the Ethereum price has fallen below the altcoin sector average since the start of the week.
With Ethereum’s price currently lagging the broader market trend, strategic investors may find it undervalued. If they decide to take advantage of ETH’s discounted prices by entering new positions, ETH prices could be on the verge of a major breakout in August. But first, investors will be watching to see how the ETFs perform as they enter their first full month of trading.
Notably, after the launch of the Bitcoin ETF in January, it took until March 2024 for BTC to record its biggest price breakout amid an influx of funds from newly launched derivative assets.
If Ethereum follows the same pattern, ETH is likely to break through key resistance levels in August as it prepares for a possible breakout if the US Fed cuts rates in September as widely expected.
Ethereum Price Prediction: Can ETFs Prevent $3,000 Pullback?
The recent price action of Ethereum, as shown on the daily chart, points to a potential continuation of the bearish trend despite the previous gains. The price experienced a significant increase of 15.08% over the three-day period, reaching a peak of $3,396.01. However, this increase met with strong resistance, causing a sharp pullback. Ethereum is currently trading at $3,106.58, reflecting a decrease of 3.87% over the session on August 1.
The Parabolic SAR (Stop and Reverse) dots above the price are signaling a bearish trend. This suggests that the downward momentum could continue unless there is a significant reversal. The immediate resistance level is around $3499.01, followed by a more significant barrier at $3600. Failure to break these levels could lead to further downward pressure.
On the other hand, Ethereum is approaching a critical support level at $3,000. A decisive break below this level could accelerate the bearish trend, pushing the price towards the next support at $2,800. The ADX (Average Directional Index), currently at 20.94, indicates a weak trend, but any increase in the ADX could confirm stronger bearish momentum if it exceeds 25.
While the introduction of the ETH ETF initially provided some bullish sentiment in late July, the overall trend looks bearish unless significant resistance levels are broken. Investors should keep a close eye on the $3,000 level, as a break below it could signal a deeper correction.
