Ethereum Faces Difficulties at Key Resistance as Crypto Woes Persist

  • ETHUSD
    (${instrument.percentChange}%)

ETH/USD Analysis

Fed Chair Powell signaled a moderation in the pace of rate hikes on Wednesday, saying that this could come "as soon as the December meeting" [1]. These remarks along with softer PCE inflation figures a day later, cemented market expectation for a smaller 0.5% rate increase this month, after a series of outsized 75 basis points moves.

These expectations for a less aggressive Fed have sparked a new USDOLLAR sell-off and have assisted Ethereum to extend its recent recovery. It now tests the critical 1,300 region, which includes the 38.2% Fibonacci of the November high/low slump. Successful effort will allow ETH/USD to push for mid-1,400s, although a pullback may be needed, to allow an advance to that level and beyond.

However, the FTX collapse [2] continues to ripple through the crypto world, keeping market participants on edge. BlockFi [3] was forced to file for bankruptcy in the US at the start of the week, making the latest Crypto firm to go under, after Voyager [4] and Celsius Network [5] over the summer.

Despite the broader risk-on mood that is witnessed this week, fears around the crypto industry persist and this can contain the progress of ETH/USD. Since yesterday, it faces difficulties and is unable to extend its advance beyond the aforementioned 38.2% Fibonacci.

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As long as it stays below this level, this is viewed as a limited correction that creates risk for a return to 1,153 and eventually for a deeper decline towards the 2022 lows (995) – although it may still be early for that.

The next leg of the move could be determined by the US NFP's which are due later in the day.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 02 Dec 2022 https://www.federalreserve.gov/newsevents/speech/powell20221130a.htm

2

Retrieved 02 Dec 2022 https://twitter.com/FTX_Official/status/1591071832823959552

3

Retrieved 02 Dec 2022 https://www.businesswire.com/news/home/20221128005451/en/BlockFi-Commences-Restructuring-Proceeding-to-Stabilize-Business-and-Maximize-Value-for-all-Clients-and-Stakeholders

4

Retrieved 02 Dec 2022 https://www.prnewswire.com/news-releases/voyager-digital-commences-financial-restructuring-process-to-maximize-value-for-all-stakeholders-301581177.html

5

Retrieved 28 Jan 2023 https://www.businesswire.com/news/home/20220713005911/en/Celsius-Network-Initiates-Financial-Restructuring-to-Stabilize-Business-and-Maximize-Value-for-All-Stakeholders

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