Ethereum Price Retreats Ahead of US Inflation Data and Fed Speak

Ethereum Price Retreats Ahead of US Inflation Data and Fed Speak

Ethereum price retreated during the overnight session, erasing some of the gains it made during the weekend when it rose to an all-time high. It is trading at $3,796, which is 9.45% below its all-time high of $4,202. It has a market capitalization of more than $438 billion. 

Ether pares gains

Ether has had an excellent rally in the past 12 months. The currency declined to a low of $90 in 2020 as the pandemic started. Since then, the currency surged, helped by the relatively low interest rates and unlimited liquidity that was being created by the Federal Reserve and other central banks. 

These measures led many institutional and retail investors to invest in risky assets like crypto and high-growth technology companies. In total, Ether’s price has jumped by more than 1,800% in the past 12 months. 

ETH has been on a sharp rally in the past few weeks. This trend helped push the currency above $4,000 for the first time during the weekend. 

There are several reasons why this price action happened. First, on Friday, the US published non-farm payrolls that were relatively disappointing. The data showed that the economy added just 266,000 jobs in April while the unemployment rate rose to 6.1%. 

While these numbers were disappointing, they were generally good for Ethereum and other cryptocurrencies. This is because they imply that the Federal Reserve will not be in a hurry to hike interest rates any time soon. Before the NFP data, most analysts were predicting that the Fed will start tightening faster than expected.

Therefore, the upcoming US inflation numbers will have an impact on Ethereum prices. Economists expect the data to show that the headline consumer price index (CPI) rose by 3.6% on a year-0n-year basis and by 0.2% on a month-on-month basis. The focus will be on the MoM number since inflation slumped sharply in April last year as the pandemic started. 

Still, a strong CPI will likely be bearish for Ether prices because it will increase the possibility of tightening by the Fed. Several FOMC members like Lael Brainard, Raphael Bostic, and John Williams will speak on Tuesday and share their opinion about the state of the economy.

Ethereum ecosystem growing

Second, Ethereum prices have surged because of the ongoing growth of the network. Many of the most popular decentralized applications are all built on Ethereum’s blockchain. For example, according to DeFi Pulse, the total value locked (TVL) of the DeFi ecosystem has surged to more than $81 billion. During the weekend, it rose to more than $88 billion. This is important since the biggest projects in DeFi are all built using Ethereum’s blockchain. 

Further, there are other emerging technologies that are taking advantage of the network. For example, the non-fungible token (NFT) industry has continued to grow. 

Ethereum has also surged because of institutions. Recently, investors have piled into ETH investment vehicles like futures, trusts, and even ETFs that are listed in Germany. For example, in a recent episode, Jim Cramer of CNBC said that he had bought Ethereum. Most investors see Ether as a cheaper alternative to Bitcoin.

Ethereum price technical analysis

ETH/USD chart

The four-hour chart shows that the ETH price retreated after surging to a record high. The chart shows that the pair retested the lower side of the ascending channel that is shown in black. It is also being supported by the 25-day and 50-day exponential moving averages (EMA). The Relative Strength Index (RSI) has retreated slightly below the overbought level of 70. Therefore, the price will likely rebound as more buyers rush to buy the dips.

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