When the US Fed last raised interest rates in May 2023, Ethereum (ETH) prices spiked 10%, respectively. Can the latest Fed rate hike trigger another Ethereum price increase?
On July 26, the US Fed announced another rate hike of 25 basis points. Historical price data reveals that the ETH made sizeable gains after the last two rate hikes on March 22 and May 3, 2023. On-chain data reveals that Ethereum investors have been making some bullish moves since market indicators hinted at a rate hike this week.
Investors Have Been Moving Coins into Exchanges Ahead of the Rate Hike
According to Santiment, Ethereum exchange supply dropped to a 5-year low of 11.07 million ETH on July 17. As the exchange supply and trading activity dried up, ETH prices stagnated within $1,850 – $1,890 over the last two weeks.
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However, in response to the latest rate hikes, transactional activity across the ETH ecosystem has started to come alive again this week. Pointedly, between July 22 and July 27, the ETH exchange supply increased by 40,000 coins, as shown in the chart below.
Supply on Exchanges tracks the number of tokens investors have deposited in exchange wallets. When exchange reserves increase after dropping to historic lows, it signals an uptrend in market participation.
This marginal increase in exchange ahead of the Fed rate hike could mean that Ethereum investors are preparing to conduct more transactional activity. Ultimately, this could stir up positive ETH price action in the coming weeks.
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Ethereum Transactional Activity Has Started Rising Again
Furthermore, Ethereum has witnessed spikes in transaction volumes this week. This confirms that the Fed rate hike could positively impact ETH network activity.
At the start of the week on July 22, 1.14 million ETH were transacted on the Ethereum network. However, by July 27, the daily Transaction Volume has gradually climbed to 1.88 million ETH. This represents a 65% surge in transactional activity this week alone.
Transaction Volume evaluates changes in network activity by aggregating the number of tokens transacted across the network on a given day. As observed above, it signals increased economic activity when it starts to rise.
Considering how it has coincided with the Fed Rate hike, it could be a pointer to another ETH price surge.
ETH Price Prediction: Another $2,000 Retest Incoming?
If ETH enters a 5% to 10% rally, as observed during the previous rate hikes in March and May 2023, a reclaim of $2,000 could be within reach.
However, strategic bulls will be wary of the initial $1,900 resistance level. As shown below, 9 million wallets bought 36 million ETH at the minimum price of $1,910. If they exit their positions when they break even, Ethereum could enter a mild retracement.
But if the Fed Rate hike fuels the bullish momentum as predicted, Ethereum could promptly reclaim the $2,000 milestone.
Although unlikely, the bears stand a chance of negating the bullish narrative if the Ethereum price slips below $1,800. However, the $1,850 support level currently appears quite formidable.
As shown above, 4 million addresses had bought 5.08 million ETH coins at an average price of $1,857. They could offer some bullish support to avoid slipping into a loss position.
Nevertheless, if that support level fails to hold, Ethereum could drop toward $1,750
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