ETH was trading close to the important psychological level of $2,400. It was last seen trading at $2,398, down by 2.25% in the last 24 hours. With ETH closing in on the $2,400 support level, it could see further sell-offs.
This prices could be testament to the generally negative sentiment in the market. Some of the recent developments including stricter regulations and the recent Fed meet could provide some insight. Other leading altcoins were also trading in the red, with XRP and Cardano (ADA) falling by 1.85% and 1.65% respectively.
The $2,400 level could act as a strong support level for Ethereum, however, a close below this level could see further sell-offs. The $2,372 level has previously acted as a strong support level and could see buying pressure. The level below this would be $2,350. The strongest resistance level is between $2,450 and $2,500.
While there were significant ETF outflows, Ethereum still rallied. On September 16, Ether spot-based U.S. ETFs had net outflows of $224 million.
Ethereum Price Breakdown
There were several developments that made Ethereum price movements interesting. The first development was the increased volatility in Ethereum prices due to market worries about inflation and the Federal Reserve’s monetary policy.
Higher interest rates are negative for risk-on assets like Cryptocurrencies. Falls in ETH prices lead to increasing value for ETH’s institutional and retail investors as the cost of ETH’s borrowing rises. In an increasing rate environment, Ethereum investors should be concerned about ETH’s price appreciation as potential buying should dry up as ETH’s sell-side becomes exhausted.
Ethereum ETFs Suffered -$224 Million in Flows on September 16
Flows by institutional investors also affect the short term price trend of ETH. U.S. spot ETFs for Ethereum lost about -$224 million in Flows on September 16. During the same day, Flows for Bitcoin ETFs lost about -$296 million. In the end, about -$520 million was pulled from the two markets.
BlackRock ETHA lost about -$110 million during the day. Fidelity’s FETH lost a significant negative Flow as well. However, the price of Ethereum increased during the day, indicating that the price of Ethereum does not always correlate with negative flows for Ethereum ETFs. More specifically, ETF flows do not necessarily result in a direct price change for Ethereum.
Other Negative Developments in the Crypto Market
The U.S. Senate not passing the CLARITY Act increased uncertainty in the crypto market. Combined with the rate hike by the Federal Reserve, it created a negative outlook for crypto.
In the short term, a challenging environment for Ethereum has been created by rising interest rates, combined with regulatory and ETF-related (exchange traded fund) outflows.
Will Ethereum Sustain Above $2,400?
We expect Ethereum to trade in a range between $2,400 and $2,500 in the near term. The lower end of this range should be defended. If this level is violated, more weak hands would be expected at lower prices. Bidders should be dominated by selling pressure from institutions. A closing price below $2,400 could signal a retest of the lows at $2,350 and $2,372.
From a technical analysis perspective, the Ethereum market is currently in no man’s land and is consolidating, rather than confirming a new long term trend. How the price of Ethereum behaves around the $2,400 level would be the largest determining factor for the medium term outlook. The direction of the Fed’s monetary policy would also be important.
