Ethereum Price Analysis: A 20% Decline Amid Rising US Bond Yields

Ethereum’s price has dropped sharply this year, encountering substantial resistance at the $4,000 level in December. The cryptocurrency has declined by nearly 20% from its December high, coinciding with an ongoing sell-off in Bitcoin and other altcoins.

Outflows from Ethereum Spot ETFs and Rising Exchange Balances

The downturn has been partly attributed to outflows from Ethereum spot exchange-traded funds. On Wednesday, these funds saw net outflows of $159 million, following $86 million the previous day. However, despite recent outflows, Ethereum ETFs have attracted a net inflow of $2.5 billion since their approval.

ETH’s decline has also coincided with a rise in exchange balances. The number of ETH held on exchanges rose to 15.85 million on January 9, up from 15.3 million on December 30. An increase in exchange balances often indicates that investors are liquidating their holdings.

Macroeconomic Impact on Ethereum

From a macroeconomic perspective, ETH has been impacted by surging U.S. bond yields amid a hawkish Federal Reserve stance. The 30-year bond yield climbed to 4.96%, its highest level since October 2023. Short- and medium-term bond yields have also continued to rise.

Rising yields suggest that the market expects the Fed to maintain its hawkish approach due to persistent inflation concerns.

Ethereum Price Outlook

The weekly chart shows that ETH encountered significant resistance at the $4,000 level, which it has struggled to surpass since March of last year. Despite the recent pullback, the cryptocurrency remains above the 50-week and 100-week moving averages, indicating that bulls still maintain some control.

Ethereum is gradually forming an inverse head and shoulders pattern, a widely recognized bullish reversal signal. Key levels to watch include:

  • The “head” at $2,155
  • The “left shoulder” formed at $2,825
  • A confirmed breakout above the neckline at $4,085
  • The all-time high of $4,865 and the psychological milestone of $5,000

A drop below the right shoulder at $2,825 would invalidate the bullish view.

As the Federal Reserve’s stance and US bond yields continue to impact the cryptocurrency market, it’s essential to stay informed about the latest developments and trends.

Stay up-to-date with the latest news and analysis on Ethereum and the cryptocurrency market at Global Crypto News.

Post Views: 0