- Ethereum price has been in a consolidation mode lately.
- The focus is on the upcoming Federal Reserve decision.
Ethereum price has been in a tight range in the past few weeks as investors wait for clues from the Federal Reserve. The coin is trading at $2,628, where it has been for days. Its market capitalization stands at $314 billion, meaning that its investors have lost over $200 billion in the past few months.
Fed decision ahead
The Federal Reserve is the most important entity in global markets. Its decision to cut interest rates and embrace an open-ended quantitative easing (QE) in 2020 helped to stabilize global assets.
As a result, stocks surged to an all-time high, with the market capitalization of companies like Apple and Microsoft soaring to over $2 trillion.
The policy also led to a surge of cryptocurrency prices. Indeed, most coins saw a jump in prices while the total value locked (TVL) in Decentralized Finance (DeFi) jumped to more than $200 billion. The total market cap of all digital currencies surged to over $3 trillion.
Ethereum was a major beneficiary of this. For one, like most cryptocurrencies, its price rose from less than $200 in 2020 to almost $5,000.
It also benefited as its ecosystem expanded. In the past two years, we have seen sectors like DeFi, Non-Fungible Tokens (NFT) and the metaverse do well.
Therefore, there are concerns that the Fed will undo all these gains and crash Ethereum prices. For one, Ethereum price has crashed by over 40% from its all-time high in November. That performance has coincided with a period when the bank decided to start tapering its asset purchases.
There are two schools of thought. First, some analysts believe that the Fed rate hike will lead to lower Ethereum prices. Besides, risky assets tend to underperform in a period of high-interest rates.
Second, some believe that the coin’s price will rebound since the Fed’s rate hikes scenario has already been priced in by investors. Therefore, a rate hike will lead to a scenario where investors will buy the fact.
Ethereum price forecast
The daily chart shows that the Ethereum price has been in a tight range in the past few days. As a result, the coin remains at the 25-day and 50-day moving averages. A closer look shows that it has formed a symmetrical triangle pattern. In price action analysis, this pattern is usually a sign that a breakout will happen.
Therefore, there is a likelihood that ETH price will initially fall after the Fed rate hike and then it will resume the bullish trend. The next key resistance to watch will be at $3,000.
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