Ethereum Price Rally Stalls After Key JP Morgan Warning
- Ethereum has formed a cup and handle pattern on the 1-day chart.
- JP Morgan chief strategist warned that the current rally in stocks will be short-lived.
- Ethereum has a close correlation with American stocks.
Ethereum price has made a steady recovery in 2023 as correlation with other cryptocurrencies intensifies. ETH/USD jumped to a high of $1,675, which was the highest point since the collapse of FTX. Recently, however, there are concerns about whether this rally will continue.
JP Morgan warning
An important thing about the recent ETH rally is that it has coincided with the stocks comeback and a collapse of the US dollar and the VIX index. The US dollar index plunged to $101 while the VIX, which is the fear gauge in Wall Street, plunged to about $20. At the same time, the Dow Jones and Nasdaq 100 indices have been rising.
In an interview with CNBC, JP Morgan’s Chief Market Strategist, Marko Kolanovic, warned that the ongoing market comeback will be short-lived. He argued that the economy faced too many headwinds that will be difficult to sustain the rally.
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For example, he cited the fact that America’s retail sales have been slumping while corporate profits remains on edge. Companies like Microsoft and Alphabet have also announced substantial layoffs. Most importantly, the Fed has still signaled that it will continue hiking interest rates in a bid to fight the elevated inflation.
Therefore, if the analyst is accurate, it means that stocks are having a bearish rally. As such, it will likely resume the bearish trend. If this happens, it also means that Bitcoin and Ethereum prices will also start falling.
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Not everyone is bearish. In a separate interview, Fundstrat’s Mark Newton sounded optimistic and hinted that the S&P 500 could surge to $4,500. He estimated that the weakness in Q1, Q2, and Q3 will be followed by a stellar performance in Q4.
I agree with Fundstrat’s estimates since the market tends to do well during a recession. A recession, as we saw in 2020, brings inflation lower, which pushes the Fed to pivot.
Ethereum price prediction
ETH/USD price has been in a strong bullish trend in the past few weeks. This recovery saw it rise to a high of $1,675, the highest point on November 5. It has formed what looks like a cup and handle pattern, which is usually a sign of a bullish continuation.
Ethereum crypto price has moved above the ascending trendline shown in red. This trendline connects the lowest point in June, November, December, and January. Therefore, a likely situation is where the coin retests the key support at $1,360 (December 13 high). It will then resume the bullish trend and retest the resistance at $1,792 (Nov 4 high) and $2,032 (August high)