ether (ETH), the cryptocurrency that powers the smart-contract-enabled Ethereum The second most valuable cryptocurrency in the world by blockchain and market capitalization is in consolidation mode ahead of what is touted as one of the most important Fed policy announcements in years.
ether On Tuesday, it was last changing hands above $1,800, after seeing a nice bounce from the previous weekly low of $1,720. The cryptocurrency was up nearly 6% over the past seven days.
Price Prediction – How the Fed’s Rebalancing Act Could Affect Ethereum (ETH)
US Central Bank Interest rates are expected to rise by another 25 bps, bringing the federal funds target range to 4.75-5.0%.
However, following the collapse of a series of regional US banks earlier this month and amid signs that the risk of contagion continues to haunt dozens more, the bank is expected to soften its tone on a more dovish outlook.
however, The Fed faces a balancing actAs US inflation is still well above its 2.0% target, they may not want to ease financial conditions too much.
ether Could easily fall to fresh weekly low under $1,700 if Fed’s message is interpreted as more dovish than markets expect The battle is not over).
But should this spell more trouble for struggling banks, that could once again come to the aid of crypto, as investors seek to “hedge” against weakness in the traditional financial sector (i.e. gold and blue chip cryptos like bitcoin and ether). transfer funds to an asset treated as such.
Alternatively, if the Fed turns out to be more dovish than the market expects, it could trigger broader risk aversion, which would likely lift Ether.
ETH/USD bulls will be eyeing a test of last August’s “merge” high of $2,030, which is a 12% upside from current levels.
How High Can Ether (ETH) Go in 2023?
The emergence of troubles in the US (and global) banking sectors seems to have triggered a significant shift in the macro narrative driving traditional asset classes and cryptocurrencies that could have a big impact on Ether’s outlook for 2023.
First, if current money market pricing is to be believed, a dovish pivot from the Fed now appears to be just around the corner.
This means the outlook is tilted towards much easier rather than tighter financial conditions for the remainder of 2023, which have historically been bullish for cryptocurrencies like ETH.
Crypto, led by bitcoin, also appears to be benefiting from the safe-haven inflow, with investors finally starting to see blue-chip crypto as a viable alternative to the mainstream, fiat-based financial system.
If the infection continues to spread in the US banking sector, it will benefit Ether rather than harm it.
ETH/USD’s strong recent bounce above its 200-day moving average and the recent golden cross (ETH’s 50DMA moved above its 200DMA in early February) are both long-term bullish technical signals.
The pair could continue grinding higher in the weeks and months ahead, with a distinct possibility of a push into the upper/mid $2,000s per coin.
ETH Supply Deflation Could Make For Weaker On-Chain Activity
According to on-chain data presented by The Block, activity on the Ethereum blockchain has yet to show the kind of pickup that has historically been necessary for a true ETH bull run.
The number of daily active and new addresses and the number of daily transfers continue to remain within bear market ranges.
These will need to see a substantial correction if Ether is to reach new all-time highs.
But ETH may still get a lift from this rising deflation rateWho briefly exceeded 5.0% on an annualized basis a few weeks ago (although last was around 0.6%).
Upcoming “Shapela” Upgrade The Ethereum network is also being touted as a major potential bullish catalyst for ETH in mid-April.
The upgrade will allow staking ETH withdrawals for the first time, with more flexibility expected to (in the long run) attract more investors to stake their ETH tokens.
This could reduce the circulating supply of ETH (assuming ETH holders are willing to hold their tokens to earn interest over the long term), increasing its scarcity on exchanges and driving the price higher.
