Ethereum (ETH) price rallied 17% and 3%, respectively, after the last two US Federal Reserve Meetings on June 14 and July 25, 2023. On-chain analysis explores how Ethereum price could react to the upcoming Fed Rate announcement slated for Sept 19, 2023.
Ethereum (ETH) price witnessed a 17% rally to $1,900 between June 14 and June 21, 2023. The price bounce came after the Federal Reserve announced held fund rates unchanged at 5.25%, following 10 consecutive hikes since March 2022.
Since then, the Fed has raised rates once again by 0.25% on July 25 2023. Given that the hike was slightly lower than markets had expected, ETH price recorded a mild 3% price bounce by the end of the month.
USA Whales are Mounting Buying Pressure
With the next Fed meeting fast approaching, a vital on-chain indicator shows US institutional investors have started mounting buying pressure. Indicatively, the chart below shows that on Sept 13, the Coinbase Premium Index hit 0.27, breaking into positive values, for the first time this month.
CryptoQuant’s Coinbase Premium Index, shows the percentage difference between spot prices on Coinbase Pro and Binance exchanges. While Binance dominates the retail spot market globally, Coinbase Pro is largely dominated by US-based institutional entities and high-networth investors.
Positive values of the Coinbase Premium Index imply that US-based investors are increasing their buying pressure on Coinbase.
The last time the Coinbase Premium Index broke above the 0.30 range was around July 13. And that was instantly followed by a price rally toward $1,925. Curiously, ETH has not attracted enough market demand to reclaim the $1,930 spot since then.
It remains to be seen if the ETH Coinbase Premium Index will continue rising as it did in mid-July. If that happens, it could also shore up retail investors’ confidence and trigger a price rally ahead of the next Fed meeting.
Interestingly, the bullish activity surrounding ETH has not been limited to the Spot markets alone.
Bullish Traders in the Derivatives Markets Are Getting in on the Act
While US whales seem to have started buying Ethereum, investors in the speculative derivatives markets are also taking on a positive disposition.
According to CryptoQuant data, the ETH Taker Buy Sell ratio has broken into positive values to hit a two-month peak at 1.07 on Sept 14.
CryptoQuant’s Taker Buy Sell data depicts the ratio of buy volume divided by the sell volume of takers in perpetual swap trades in the derivatives markets. When the ratio is greater than 1, as observed above, it indicates that takers are predominantly buying more contracts than they are selling. This suggests bullish sentiment or dominant buying pressure in the Ethereum derivatives market.
In summary, the bullish sentiment growing in the spot markets and derivatives markets could see ETH price rally ahead of the Fed meeting.
ETH Price Prediction: Possible $1,900 Retest
If the Fed holds fund rates constant as predicted, it could positively impact Ethereum price and other risk-on assets. And from an on-chain perspective, Ethereum holders could target another rally toward $1,900.
The In/Out of the Money Around Price (IOMAP) data, which shows the entry price distribution of active Ethereum holders, also affirms the stance.
It shows that 7.76 million addresses had bought 8.64 million ETH at an average price of $1,740. As seen below, they could offer significant support.
But if the Fed holds the rate unchanged at 5.50% and US whales continue mounting buy pressure as predicted, the bulls could overcome that resistance level and reclaim $1,900.
Still, if the bears regain control, they could attempt a downswing toward the $1,500 range. However, as shown above, 3.6 million addresses had bought 7.5 million Ethereum at the minimum price of $1,570. If they HODL, the ETH price could rebound early.
But if that support level does not hold ETH price could decline toward $1,500.
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