Ethereum bulls could stage 30% rally following Fed Chair's keynote, withdrawing over 284K ETH from exchanges
|- Ethereum jumped by over 6% after Fed Chair confirmed that the central bank is looking to cut rates.
- ETH exchange net flows hit a two-month low after buyers moved over 283.9K ETH out of exchanges.
- Ethereum ETFs extend outflow streak to six consecutive days after Grayscale's ETHE offset positive flows in Fidelity's FETH.
- The top altcoin has the potential for a 30% rally if bulls can stage strong buying pressure to overcome a key rectangle's resistance.
Ethereum is up over 6% on Friday as bulls have initiated heavy buying pressure following indications from US Federal Reserve (Fed) Chair Jerome Powell that an interest rate cut is imminent.
Daily digest market movers: Rate cuts, Ethereum outflows, ETF streak
Fed Chair Powell noted that an interest rate cut is on the horizon in his Friday morning keynote at Jackson Hole, Wyoming. "The time has come for policy to adjust," said Powell. "The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks."
Following his speech, Ethereum jumped alongside the crypto market by more than 2% as investors appeared to be regaining confidence in the top altcoin. Risk assets like cryptocurrencies tend to perform better during lower interest rate environments due to a lower cost of capital.
The buying pressure from investors is noticeable in Ethereum's exchange net flow, moving to 283.9K ETH in outflows — its lowest since June 11.
ETH Exchange Netflow
Exchange net flow is the difference between coins flowing in/out of exchanges. Net outflows signify dominant buying pressure, while vice versa for net inflows.
The seven-day ETH exchange net flow moving average also plunged to 38,983 ETH in outflows.
Meanwhile, Ethereum ETFs look set to end the week with net outflows after extending their negative flows streak to six days on Thursday, per Farside Investors' data. The nine US spot ETH ETFs posted a combined net outflow of $800,000 — its lowest outflow day since launch.
Notably, Fidelity's FETH recorded net inflows of $14.3 million, while VanEck's ETHV and Grayscale's mini ETH saw inflows of $1 million and $3.7 million, respectively. However, their positive flows were offset by outflows of $19.8 million in Grayscale's ETHE.
The decrease in outflows combined with the wider market’s positive sentiment could help ETH ETFs record their first net inflows on Friday.
ETH technical analysis: Ethereum could rally 30% if it overcomes key rectangle's resistance
Ethereum is trading around $2,780 on Friday, up over 6% on the day. In the past 24 hours, ETH has seen over $47.37 million in liquidations, with long and short liquidations accounting for $12.95 and $34.42 million, respectively.
ETH has been trading within a key rectangle since the market crash on August 5. The $2,817 price, which served as a key support level for five months from March to July, has been a key resistance after ETH breached it on August 4.
ETH/USDT Daily chart
A key trendline extending from May 27 to September 25 has also kept ETH's price at bay.
However, with the Fed Chair confirming a rate cut is imminent, ETH could overcome the $2,817 resistance and stage a 30% rally toward $3,542. A breakout above $3,542 could see ETH attempt a move toward its yearly resistance of $4,093.
ETH faces resistance from the 100-day and 200-day Simple Moving Averages (SMA) on the way up.
The moving average of the Relative Strength Index (RSI) has been rising after posting a lower low on August 15. A cross above its midline could give strength to a bullish move.
The Awesome Oscillator (AO) has been posting consistent lower green bars below zero since reaching a low on August 10, indicating that the bearish momentum is weakening.
Cryptocurrency prices FAQs
Token launches like Arbitrum’s ARB airdrop and Optimism OP influence demand and adoption among market participants. Listings on crypto exchanges deepen the liquidity for an asset and add new participants to an asset’s network. This is typically bullish for a digital asset.
A hack is an event in which an attacker captures a large volume of the asset from a DeFi bridge or hot wallet of an exchange or any other crypto platform via exploits, bugs or other methods. The exploiter then transfers these tokens out of the exchange platforms to ultimately sell or swap the assets for other cryptocurrencies or stablecoins. Such events often involve an en masse panic triggering a sell-off in the affected assets.
Macroeconomic events like the US Federal Reserve’s decision on interest rates influence risk assets like Bitcoin, mainly through the direct impact they have on the US Dollar. An increase in interest rate typically negatively influences Bitcoin and altcoin prices, and vice versa. If the US Dollar index declines, risk assets and associated leverage for trading gets cheaper, in turn driving crypto prices higher.
Halvings are typically considered bullish events as they slash the block reward in half for miners, constricting the supply of the asset. At consistent demand if the supply reduces, the asset’s price climbs. This has been observed in Bitcoin and Litecoin.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.