Ethereum faced downward pressure due to the recent shift towards a more hawkish stance in the markets, with expectations of additional rate hikes by the Federal Reserve. This impact is attributed to Ethereum's classification as a risk asset, as its correlation with traditional markets and fundamentals has increased with wider adoption. However, these hawkish expectations have started to diminish due to disappointing economic data. Nevertheless, this week, Ethereum was further affected by regulatory concerns raised by the U.S. Securities and Exchange Commission (SEC).
Specifically, the SEC filed a lawsuit against Binance, the world's largest cryptocurrency exchange, and its Chairman Zhao on Monday. The allegations include mishandling customer funds, providing false information to regulators, and misleading investors about operational safeguards. The following day, the SEC also sued Coinbase for operating as an unregistered broker. Despite these regulatory challenges, Ethereum experienced a significant rally, possibly driven by expectations that increased regulation would strengthen the overall cryptocurrency market or simply due to a technical rebound.
Ethereum Technical Analysis – Daily Timeframe
On the daily chart, Ethereum bounced on the 50% Fibonacci retracement level and started to range between the 1900 level and the Fibonacci support. The market got stuck in a range as the fundamentals remain increasingly bearish with hawkish or recessionary expectations and attacks on the regulatory front. The divergence with the MACD signalled a possible pullback or reversal coming when the price broke out of the 2029 high and eventually that’s what we got.
Ethereum Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can better see the current rangebound price action and the yesterday’s rally soon after the SEC sued Coinbase. There’s not much to glean from this chart as support and resistance levels are messy and the markets are in a limbo until the next week’s CPI and FOMC events.
Ethereum Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we have some support zone at the 1840 level where we can find the confluence with the 38.2% and 50% Fibonacci retracement levels. We may find buyers leaning on this area with a defined stop below it and target the 1920 high. The sellers, on the other hand, are likely to pile in if the price breaks below the 1840 support zone and target the 1681 level.
