Will Ethereum Price Bounce Back?
Ahead of Federal Reserve Chairman Jerome Powell’s announcement of a 25 basis point (bps) interest rate cut, Ethereum (ETH) holders were optimistic that the event would push the price towards $4,500. However, the rate cut did not produce the expected bullish results and ETH soon fell by 4.50%.
The decline dampened hopes of a significant breakout and raised questions about Ethereum’s next move.
Ethereum changes reaction compared to last rate cut
A few months ago, the Fed cut interest rates by 50 basis points. This development has led to Notable gatherings Cryptocurrency prices, including Ethereum. At the time, market sentiment was leaning towards expectations of a similar rate cut before the end of the year. However, this did not materialize.
The following yesterday’s decisionthe price of ETH fell from $3,890 to $3,624. While the cryptocurrency has recovered slightly, some on-chain indicators suggest that the attempted rebound may be a false breakout.
One of the indicators that indicates this is the divergence of price from Daily Active Addresses (DAA). Price DAA Difference checks whether user engagement increases as price increases. When it is positive, it means people’s participation in the cryptocurrency has increased and is beneficial to its price.
On the other hand, a negative rating indicates less interaction, which is bearish. According to data from Santiment, Ethereum’s price DAA divergence has dropped to -98.28%, indicating low user engagement. If this trend continues, The price of ETH could face a steeper move Prices drop.
In addition to the above indicators, the Coinbase premium gap is another indicator that supports further declines in ETH. This metric measures the price difference between the Coinbase ETH/USD currency pair and the same pair on Binance.
When the premium is higher The price of Coinbase relative to Binance indicates significant buying activity by US investors. This buying pressure could come from increased demand in the area and favor higher prices.
Conversely, when Coinbase’s price lags behind that of Binance, it may indicate a relative cooling of demand in the U.S. market, or greater selling pressure from institutional or retail investors.
The chart above shows that the premium gap has dropped to -1.96, indicating that ETH is facing huge selling pressure after the Fed cut interest rates.
ETH Price Prediction: It’s Not Yet the Season of $4,500
In addition to ETH’s reaction to the Fed’s interest rate cut, it went through The decline is due to the formation of a head and shoulders pattern on the 4-hour chart. The head and shoulders pattern is a classic technical analysis chart pattern that indicates a potential trend reversal. bullish Bearish.
The pattern is characterized by price rising (left shoulder), then peaking (head), and then falling (right shoulder). When price breaks below the neckline after forming the right shoulder, it signals a bearish trend reversal.
However, the reliability of this pattern depends on the trading volume. As you can see in the chart below, trading volume has decreased around ETH and the price has fallen below the neckline.
If it remains unchanged, then ETH price could drop to $3,501. However, this prediction may not come to fruition if volume increases along with increasing buying pressure. instead, The price of Ethereum could rise to 4,109 and ultimately $4,500.
Disclaimer
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