The Federal Reserve chairman sidelined inflation concerns, which appears to have coincided with a relief for Ethereum. Ethereum Bounces But ETH Price Threatens To Turn $2.3K Into New Resistance.
Ethereum’s native token Ether (ETH) recovered $2,000 during New York’s early trading hours on Wednesday as crypto traders reviewed Federal Reserve Chairman Jerome Powell’s prepared congressional statement.
The ETH/USD exchange rate rose 7.19% and reached its intraday high of $2,019.90. Similarly, Bitcoin (BTC), whose 7-day positive correlation with Ether is 0.84, climbed above zero, albeit by a modest 0.75%, reaching $32,379. Uniswap UNI price has risen.
Ether Bounces On Key Support Area Wednesday Morning
Powell gave his semi-annual report on monetary policy to Congress on Wednesday, a day after the US consumer price index report showed a 0.9% increase between May and June, to 5.4% for the first time in three decades.
In prepared remarks ahead of his congressional statement, Powell noted that inflation would remain high in the coming months. Nevertheless, the head of the central bank added that rising consumer prices would not deter them from their continued bond buying policy.
Powell said the threshold for limiting monthly debt purchases of $120 billion – which dampened the US economy during the coronavirus pandemic – is “still some way off.” In doing so, he quoted US labor markets and stated that the full recovery “still has a long way to go”.
The statements came after a Bank of America survey of global fund managers, who believed the global economy would continue to improve, fell dramatically from 91% in March to 47% in July. The same poll named long Bitcoin – betting on rising BTC/USD rates – one of the busiest trades next to long ESG and long commodities.
Economic expectations have peaked
But both Bitcoin and Ether fell after Tuesday’s CPI report and prior to the publication of Powell’s testimony, sparking criticism from critics for failing to act as a haven in the face of higher consumer prices. Part of the reasons was fears that the Fed would signal sometime in 2020 to phase out its bond purchases and raise its benchmark interest rates only in January 2023.
Powell’s assurance that their plans to phase out are still gone has injected short-term optimism into the cryptocurrency market, benefiting both Bitcoin and Ether.
A technical leap?
Ether’s latest advantage also appeared in the wake of a technical support level with a recent history of limiting ETH/USD’s bearish bias.
ETH stayed in a symmetrical triangle range
The said price floor serves as a rising trendline in a symmetrical triangle pattern. Ether has been fluctuating within the said structure since mid-June, as shown in the chart above, increasing the chances of retesting the triangle’s resistance trendline (above the $2,300 level) in the coming sessions.
Nevertheless, symmetrical triangles are continuation patterns that typically send prices in the direction of their previous trend. Since Ether’s current triangle formation appears in a downtrend, ETH/USD’s path of least resistance is down. LINK Chainlink price has risen.
Outbreak Scenarios for Symmetric Triangles
Therefore, Ether continues to bear bearish risks on technical patterns. Nevertheless, the cryptocurrency has outperformed expectations despite a brutal crypto market sell-off in the second quarter of 2021. In its Q2 report released in July, data intelligence firm CoinMetrics noted that Ether was up 13.2% in the financial quarter. closed against Bitcoin’s -38.88%. It wrote:
“ETH benefited from a renewed wave of retail interest fueled in part by the meteoric rise of NFTs. While NFT media interest peaked in March, it helped bring unprecedented mainstream attention to Ethereum, leading to a flood of from new users.”
More upside prospects for Ether are coming from the London hard fork. The upgrade would implement four improvement proposals on the Ethereum blockchain. One of the proposals, called EIP-1559, expects to make ETH a deflationary asset by burning some of the fee collected from Ethereum users.