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Investing.com – After losing a lot of ground over the past week, Ethereum tentatively tried to rebound on Saturday, but Sunday finally saw the sellers regain control, and push the price to new lows.
Ethereum did indeed bottom early Monday morning at $1,300, and remains very close to that threshold at the time of writing, posting a drop of more than 10% over 24 hours and around 25% for the past week. .
Ethereum Traders Sell New Merge Face
Recall that the main explanation for this Ethereum rout is to be linked to the successful implementation of the Merge update last week, which confirmed the transition of the ETH network from proof of work to proof of challenge, reducing network energy consumption by more than 99%.
So this is good news. However, this had been widely anticipated for several months, and investors finally “sold the news” after “buying the rumor”, according to the famous stock market adage, which very often turns out to be correct in the cryptocurrency market.
The fate of ETH depends on the Fed this week
This week, however, the market’s attention will be focused on other more macroeconomic topics, including Wednesday’s Fed meeting, which will be a potentially decisive event for cryptocurrencies, including Ethereum, but also for financial markets. in general.
Consensus calls for another 0.75% rate hike, but recent better-than-expected US inflation numbers have paved the way for an even bigger 1% rate hike.
For now, investors are factoring in a 15% chance of the Fed raising rates by 1%, and the higher that chance will be by the time the Fed meets, the more “only” a rate hike will be. 0.75% will likely reassure investors and support cryptos.
Conversely, a 1% Fed rate hike would guarantee cryptocurrencies, and risky assets in general, to plummet.
>> To monitor the evolution of the probability of seeing the Fed hike rates by 1% on Wednesday, regularly consult the Investing.com Fed Rate Barometer!
Ethereum chart analysis
From a graphical point of view, it should be noted that Ethereum still displays a very clearly bearish profile in the short term. The hourly chart notably makes it possible to identify a bearish channel that has been visible for about a week, and whose upper limit stopped an attempted rebound by ETH on Saturday and sent the cryptocurrency down.
The bottom of the channel near $1280 pairs with the psychological $1300 threshold to form immediate potential support for Ethereum. Below this zone, few significant supports can be spotted before the $1000 threshold.
On the upside, the former support of $1410 is the first significant resistance along with the psychological threshold of $1500.
Finally, it should be noted that taking a step back in daily data does not offer more hope for the case of Ethereum. Indeed, the break below the $1400 zone validated this weekend corresponds to a break below the neck line of a Shoulder-Head-Shoulder pattern, thus validating a graphic pattern of a bearish reversal.
The theoretical target for this bearish reversal pattern is around $600 below the neck line that is the $1400 threshold, which would bring us back to an ETH price of around $800.