FUNDAMENTAL OVERVIEW
Ethereum has been
remarkably resilient over the past week, considering the increasingly negative
macro backdrop for risk assets. The higher than
expected US monthly core inflation data has sealed a Fed rate hike on Wednesday,
while oil prices above $100 are adding
inflationary pressure and reinforcing expectations for tighter monetary
policy.
Despite these headwinds, Ethereum
has managed to hold relatively firm. This suggests that crypto-specific
developments might have been providing short-term support to offset the negative
macro pressure. The main driver might have been growing optimism for the
cloture vote on the CLARITY Act.
The legislation seeks to
provide the US crypto industry with a more defined regulatory framework,
including a clearer division of responsibilities between the SEC and CFTC. It
would also introduce regulatory requirements for crypto exchanges, brokers and
dealers.
Greater regulatory clarity would
be positive for the crypto market. Clearer rules would reduce uncertainty for
exchanges and traditional financial institutions, while potentially making it
easier for asset managers and other financial firms to develop and offer
crypto-related products. If successful, the legislation could pave the way for
greater institutional participation, deeper market liquidity and additional
capital entering the crypto market.
The immediate catalyst comes
today
at 2:15pm ET, when the Clarity Act faces its first major Senate hurdle in the
form of a cloture vote. The vote requires 60 senators to support opening
debate on the legislation.
A failed vote could close
the legislative window for crypto market structure this year, given the
November midterms. This outcome would likely be negative for Ethereum and could
trigger a selloff. But even a successful vote may not be positive. With the
FOMC decision coming tomorrow, I think Ethereum could experience a classic “sell
the fact” reaction as traders shift their attention from the Clarity Act
back to monetary policy and the macro picture.
ETHEREUM TECHNICAL
ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can
see that Ethereum probed
above the 2,560 resistance two times but failed to sustain the breakout. This
might be a bearish signal if we also consider the macro backdrop. If the price
drops back to the 2,360 support, we can expect the buyers to step in there with
a defined risk below the support to keep targeting a rally into the 3,000
level. The sellers, on the other hand, will want to see the price breaking
below the support to increase the bearish bets into the major trendline next.
ETHEREUM TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, there’s
not much we can glean from this timeframe as the choppy price action inside the
range doesn’t give clear levels where to lean on except the main support and
resistance defining the range. Nonetheless, the swing low around the 2,462
level could act as a minor support. The buyers might step in there with a
defined risk below it to keep pushing into new highs, while the sellers will
look for a break to increase the bearish bets into the 2,360 support next.
ETHEREUM TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, there’s
not much we add here but from a risk management perspective, the buyers will
have a better risk to reward setup around the 2,360 support, while the sellers
will want to see the price breaking below it to extend the drop into new lows.
UPCOMING CATALYSTS
Today, we have the cloture vote onCLARITY Act. Tomorrow, we have the
FOMC rate decision. On Thursday, we get the US Jobless Claims figures. Traders
will also keep a close eye on developments in the Middle East.
This article was written by Giuseppe Dellamotta at investinglive.com.