Ethereum attempts comeback after Fed decision not to tamper with rates

• Institutional whales appear to be dumping Ethereum after recent dip.
• Fed’s decision to leave rates unchanged appears to have helped ETH’s price recover slightly. 
• SEC Chair Gensler has misled Congress, considering recent revelations from  Consensys suit, says Congressman McHenry.

Ethereum (ETH) saw another day of decline on Wednesday as its price dipped outside of a key range. This follows a possible sell-off from institutional whales, the US Dollar Index gaining strength, and the Chair of the US House Financial Services Committee, Patrick McHenry, accusing Securities & Exchange Commission (SEC) Chair Gary Gensler of misleading the US Congress.

Read more: Ethereum dips below key level as Hong Kong ETFs underperform

Daily digest market movers: Whales dump, SEC Chair accused

Ethereum’s classification as either a security or commodity is trending on Wednesday. Here are your key market movers: 

• ETH dip follows the US Dollar index gaining strength as it shot above 105.00 for the first time in nearly five months. This may have been responsible for Bitcoin’s further decline on Wednesday, taking Ethereum along with it. A strong US Dollar may see investors giving less attention to cryptocurrency investments.

  As a result the market’s reaction aligns with earlier predictions that a key macro event could have a prevailing impact on the price of Ethereum.

  However, Ethereum appears to be quickly recovering losses following the Federal Reserve leaving rates unchanged at 5.25-5.5% on Wednesday. This indicates the Fed hasn’t made tangible progress in tackling inflation.
   

• Following a further plunge across top cryptocurrencies, institutional whales have been depositing ETH heavily on exchanges, according to Whale Alert. A series of posts from Whale Alert confirms whales have deposited over 100,000 ETH to exchanges in the past 24 hours.

Also read: SEC Chair “knowingly misled” Congress over Ethereum status, House’s McHenry says

• Meanwhile, as reported earlier, Chair of the US House Financial Services Committee Patrick McHenry accused SEC Chair Gary Gensler of an “intentional attempt to misrepresent the Commission’s position” on Ethereum in an X statement on Tuesday.

  This comes after recent court filings from Consensys revealed the SEC had signed an executive order on April 13, 2023, to subpoena and begin investigating individuals and institutions that have facilitated the buying and selling of Ethereum.

  However, Gensler avoided directly answering questions about whether the SEC considers Ethereum a security during testimony to the Financial Services Committee on April 18—only five days after the executive order. As a result, McHenry stipulated that “Gensler himself misled Congress.” He stated that classifying Ethereum as a security “would be yet another example of the arbitrary and capricious nature of the agency’s regulation by enforcement approach to digital assets.”

• However, according to the SEC’s investigation manual, an investigation is part of the process to determine whether there has been a breach of federal securities law. Hence, the SEC may not have yet formed a conclusion on ETH’s status.

  This new development would prove crucial as investors await the SEC’s decision on a spot Ethereum ETF on May 23 and the Consensys suit of the regulator unfolds.

ETH technical analysis: Ethereum may not sustain any downward move outside key range

Ethereum declined again on Wednesday, crashing below the lower level of the $2,852 and $3,300 range. Most traders are gradually exiting positions as Ethereum Open Interest (OI) has declined more than 6% in the past 24 hours.

Also read: Ethereum erases weekend gains as yearlong SEC investigation comes to light

ETH/USDT 4-hour chart

While this may indicate increased bearish sentiment, Ethereum appears to be recovering and is now trading inside the $2,852 to $3,300 key range again.

The recent dip may be an attractive entry point for investors, especially if Ethereum manages to stay above the lower level of the range. Considering the growing strength of the $2,852 to $3,300 range, Ethereum will likely not sustain any downtrend outside it.