ETH at Risk of Falling Below $1,700 in the Ongoing US Debt Crisis

Sub Levels –

Key Insights:

  • On Friday, ETH ended a six-day losing streak, rising 0.72% to close at $1,808.
  • Staking data after the Chapela upgrade supported bullish trading, but the ongoing US debt crisis and US economic data capped the upside.
  • However, technical indicators remain bearish and suggest a return to below $1,700.

Ethereum (ETH) rose 0.72% on Friday. ETH partially recovered its 2.60% loss from Thursday to end the day at $1,808. Importantly, ETH ended a six-day losing streak. However, ETH has fallen below the handle amount of $1,850 for the second consecutive session.

After a mixed start to the day, ETH fell to mid-morning lows of $1,738. ETH fell to the first major support level (S1) at $1,763 and then climbed to a late session high of $1,817. However, it failed to reach the first major support level (R1) of $1,835 and ETH closed the session lower at $1,808.

US Economic Data and Sentiment Tested by the Debt Ceiling Crisis

US consumer sentiment and expectations figures for May have been of interest as the market watches for a new debt ceiling to be announced from the Capitol.

The Michigan Consumer Confidence Index fell to 57.7 from 63.5 and the Expectations Index fell to 53.4 from 60.5. Economists expect a more modest decline to 63.0 and 59.8 respectively.

Consumer fears about the economic outlook and the US debt crisis weighed on. Inflation expectations were mixed. Consumers expect long-term inflation expectations to rise to 3.2% from 3.0%, while last year’s inflation he expects to slow to 4.5% from 4.6%.

The lack of progress towards raising the US debt ceiling contributed to the bearish mood. On Friday, the Nasdaq Composite Index fell 0.35%, while the S&P 500 and Dow dropped 0.16% and 0.03% respectively.

ETH-NASDAQ correlation 130523 hourly chart

However, staking stats delivered bullish results in Friday’s session.

Staking Stats and Excess Staking Balance Signal a Bullish Session

Staking inflow eased slightly on Friday, dropping from 216,704 ETH to 215,712 ETH, according to CryptoQuant. Importantly, the inflow to staking exceeded 200,000 for three consecutive days.

ETH staking inflow 130523

Stake totals continued to rise and ETH returned to $1,800, supporting the upward trend. However, the recent surge in staking inflows is the driving force behind the current acceleration of staking totals.

Total stake 130523

The overnight withdrawal profile was relatively bearish. Principal withdrawals were above normal levels. Withdrawal forecasts for the morning session are also bearish, with principal ETH withdrawals expected to trend upward.

Despite the bearish exit profile, a surge in staking inflows kept staking balances higher than usual. On Friday, the net ETH staking balance decreased from a surplus of 199,119 ETH to a surplus of 190,440 ETH (equivalent to $345.35 million). Total deposits were 221,590 ETH and withdrawals were 31,150 ETH.

According to TokenUnlocks, the total pending withdrawal amount is 72,790 ETH, which equates to approximately $130.89 million.

ETH withdrawal profile – 130523

the day ahead

Investors should continue to monitor staking stats and withdrawal profiles. A surge in capital withdrawals and a sharp decline in staking inflows will be bearish.

But the U.S. debt ceiling crisis will also provide direction, as the likelihood of U.S. debt default remains high.

Cryptocurrencies will continue to be influential. Chatter related to the SEC vs. Ripple case will move the dials, and Binance and Coinbase (COIN) will also be in focus.

On Friday, Binance announced plans to exit the Canadian market. saying,

“Unfortunately, today we are announcing that Binance will join other prominent cryptocurrency businesses that are actively exiting the Canadian market.”

Binance.US and Coinbase are currently under scrutiny from lawmakers and regulators in the United States.

ethereum price volatility

At the time of this writing, ETH had fallen 0.51% to $1,799. The day started mixedly, with ETH rising to early highs of $1,817 before falling to lows of $1,798.

ETHUSD 130523 Daily Chart

ETH Technical Indicators

Resistance and support levels

R1 – $ 1,837 S1 – $ 1,758
R2 – $ 1,867 S2 – $ 1,709
R3 – $ 1,946 S3 – $ 1,630

ETH needs to avoid the $1,788 pivot to target the first major resistance level (R1) at $1,837. A breakout of Friday and morning highs of $1,817 will signal a breakout session. However, ETH staking statistics and US debt ceiling related news should confirm the breakout.

If the rally continues, the bulls are likely to test the second major resistance level (R2) at $1,867 and the resistance at $1,900. The third major resistance level (R3) is at $1,946.

After passing the pivot, the first major support level (S1) at $1,758 is applied. However, ETH should stay clear of $1,700 unless further risk-off declines occur. The second major support level (S2) of $1,709 should cap the downside. The third major support level (S3) is $1,630.

ETHUSD 130523 Daily Chart

Looking at the EMA and the 4-hour candlestick chart (below), it was a bearish signal. Ethereum has broken below the 50-day EMA and is currently at $1,840. The 50-day EMA has turned down from the 200-day EMA and the 100-day EMA has turned down from the 200-day EMA, sending bearish signals.

If ETH moves at R1 ($1,837) and the 50-day EMA ($1,840), the bulls will find a run at 100-day ($1,863) and R2 ($1,867). However, a failure to cross the 50-day EMA ($1,840) will leave S1 ($1,758) in view.

A breakout of the 50-day EMA will send a bullish signal.

ETHUSD 130523 4-hour chart

This article was originally posted on FX Empire

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The views and opinions expressed herein are those of the authors and do not necessarily reflect those of Nasdaq, Inc.

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