Amid heightened market turbulence, Ethereum (ETH) price has consolidated about $1,750, down 3% from last week’s peak. An in-depth analysis of the on-chain data shows that increased staking activity has helped ETH avoid drastic retracement. How will the upcoming Fed Rate announcement impact ETH price action?
Compared to the 13% decline in the global altcoin market capitalization, Ethereum (ETH) price has shown significant resilience over the past two weeks. Growing demand from concerned altcoin investors and rising ETH staking activity have been pivotal to ETH’s strong performance.
Currently, the markets have priced in a 78% possibility of a Fed Rate pause. How could the impending Fed Rate announcement impact ETH price action in the coming weeks?
Ethereum Staking Activity Still on the Rise
After reaching an all-time high in May, staking activity across the Ethereum ecosystem has continued to rise in June 2023. Glassnode’s Supply in Smart Contracts metric measures staking activity by tracking the percentage of total ETH in circulation that is currently staked across various protocols.
Between June 1 and June 12, crypto investors have staked another 360,000 ETH coins across the Ethereum Beacon chain and DeFi smart contracts.
When a coin’s Supply in Smart Contracts increases, it reduces the amount available to be traded across exchanges. This momentary market shortage is likely to trigger positive ETH price action.
Notably, United States Fed will announce the next Interest Rate decision on June 14. If the Fed announces rate cuts or a rate pause, as expected, ETH staking activity is expected to rise even further in the coming weeks.
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Crypto Traders are Queuing Up to Buy ETH
In further confirmation of the bullish outlook, the order books of exchanges suggest that crypto traders are currently piling more orders to buy more ETH.
The Exchange On-Chain Market Depth chart shows an aggregate of the total buy/sell orders from Ethereum traders across different crypto exchanges.
Amid the shake-up in the altcoin markets, crypto traders have placed orders to purchase another 137,000 ETH coins. Meanwhile, sellers have only put up 122,000 ETH for sale.
When demand for an asset exceeds the supply available on exchanges, it puts upward pressure on price as buyers begin to compete.
Currently, there is a supply shortage of 15,000 ETH across crypto exchanges. Rather than sell at current prices, ETH holders are more interested in locking up their tokens in smart contracts to earn yield. And a potential Fed Rate pause is likely to exacerbate these trends further.
In conclusion, these critical factors could see ETH price witness positive price action in the coming weeks.
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ETH Price Prediction: The $1,850 Resistance is Critical
Considering the aforementioned factors, Ethereum’s price will rise toward $2,000 if a Fed Rate pause is announced. However, for the bulls to be confident of a positive price action, ETH must clear the initial resistance at $1,850.
According to IntoTheBlock’s In/Out of The Money Around Price (IOMAP) data, 3.38 million investors that bought 10.97 million ETH at the average price of $1,835 could trigger a pullback.
But if ETH scales that resistance zone, it could make its way toward the $2,000 price target.
On the other hand, the bears could invalidate the bullish ETH price recovery if it unexpectedly drops below the critical $1,700 support zone. Although, the 1.23 million investors that purchased 1.79 million ETH at the minimum price of $1,700 will likely prevent the drop.
However, if that support level cannot hold, ETH’s price could still retrace toward $1,595.
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Disclaimer
In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.
