- Ethereum price declined slightly after the strong American inflation data.
- Data showed that the headline CPI jumped to a 40 year high.
Ethereum price retreated slightly on Friday morning as investors reflected on the latest American inflation data. ETH is trading at $3,070, which is slightly below this week’s high of $3,280. Other cryptocurrencies like Crypto.com Coin, Avalanche, Algorand, and Shiba Inu also declined.
US inflation data
Ethereum is a leading blockchain project that plays an important role in the industry. It is the platform that so many developers have used to build their projects. For example, the developers of Decentraland used the platform to build the metaverse project. Similarly, the creators of Shiba Inu used it to build the coin.
Like all cryptocurrencies, Ethereum does well in a period of easy money policies. Indeed, all of them jumped to record highs as the Federal Reserve and other leading central banks decided to slash interest rates because of the Covid-19 pandemic.
Now, there are signs that the opposite is happening as the American economic recovery accelerates. The Fed has already started tightening its policies by unwinding the giant quantitative easing policy. It has hinted that the purchases will end in March.
At the same time, the bank has hinted that it will implement about 3 rate hikes this year in a bid to slow inflation.
Data published on Thursday showed that American consumer inflation jumped by 7.5% in January this year. That was the highest increase since the 1980s. Excluding the volatile food and energy prices, prices rose by a whopping 6%.
The labor market is hot while inflation is even hotter. Therefore, there is a likelihood that the Fed will be more aggressive when it comes to rate hikes.
It is still unclear how the market will react when this tightening starts. Some analysts believe that Ethereum price will do well since the tightening has already been priced in. Others expect that it will decline. Besides, it is always recommended not to fight the Fed.
Ethereum price prediction
The daily chart shows that the ETH price has been in a strong bullish trend in the past few weeks. Along the way, the coin has managed to move between the 50% and 38.2% Fibonacci retracement level. It has also moved slightly above the first support level of the Andrews pitchfork tool.
Therefore, there is a likelihood that the Ethereum price will resume the bullish trend as bulls target the next key resistance at $3,300.
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