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Will the Ethereum rally survive tomorrow’s Fed rate hike?

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In the last week in October the price of Ethereum, the second largest cryptocurrency on the market, rose sharply after a 32.7% jump between the lowest level on October 21 at $1252 and the peak from last Saturday at $1662. And although ETH corrected on Sunday and Monday, the trend is still generally positive, and several indices show that the rise continues.

Before going into more detail on the recent bullish signals sent by Ethereum, and the factors that may continue to fuel its progress, let’s go back to the reasons for the recent rebound in the cryptocurrency .

Fed Expectations Key to Ethereum Trend

The start of Ethereum’s current bull run coincides with the remarks made by Mary Daly, Chairman of the San Francisco Federal Reserve, on October 21. She has indeed expressed her desire to see the rise in interest rates slow, prompting speculation that Fed policy could shift towards a less hawkish stance.

Then, some disappointing US statistics fueled expectations that the month-old Fed would be aggressive as it tightens its policy, given an outsized impact on economic indicators, raising recession fears.

However, expectations for this week’s Fed meeting are heavily tilted towards another 0.75% rate hike, an event more than 80% likely according to money markets.

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How to trade Ethereum ahead of the Fed meeting tomorrow evening?

So, when it comes to tomorrow’s FOMC meeting, it’s more of a guide to the next meeting than this month’s rate hike that is likely to impact Ethereum and other cryptocurrencies.

Currently, investors are expecting a fair chance of a 0.50% or 0.75% rate hike for the final Fed meeting of 2022, which will take place on December 14. So we will monitor in the statements of the Fed tomorrow evening all the indices that will make it possible to clarify those forecasts.

If the Fed reduces its dovish rhetoric and expectations continue towards a 0.5% rate hike for December, the crypto market could calm down, with Ethereum continuing to rise. If, on the other hand, the meaning of the Fed’s statement leads the market to predict a 0.75% rate hike again for the end of the year, the sellers should prevail on ETH.

Finally, it should be noted that it is also advisable to consider the unlikely scenario that tomorrow afternoon the Fed decides to raise its rates by 0.50%. ​​​​This would be a very strong dovish surprise that would provide a great reason to buy Ethereum immediately.

Bullish technical signals follow each other on ETH

Finally, from a graphical point of view, it should be remembered that there are many bullish signals on Ethereum in the last few days. In particular, the sharp rise last Wednesday and Thursday allowed the cryptocurrency to remove itself from the top of a bearish channel whose evolution had been framed since around mid-August, as can be seen in particular on the daily chart.

Ethereum also surpassed the key $1500 threshold, and especially the 100-day moving average last week, further reinforcing the bullish profile of ETH now, and inviting long-term cryptocurrency investment.

In the short term, yesterday’s high at $1662 and the 200-day moving average at $1684 currently form an immediate resistance zone. Then the next target is the $1800 area and then the $2000 area.

Finally, in case of a fall in Ethereum, the area formed by the 100-day moving average at $1525 and the psychological threshold of $1500 will be the first important support to consider.


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