Ethereum price bounced back on Wednesday as the market refocused on the Federal Reserve’s impending interest rate decision. ETH rose to a high of $1,460, which was significantly higher than this week’s low of $1,356.
Fed decision ahead
Ethereum price staged a strong recovery this month, it rose to a multi-month high of $1,665. This rally happened as investors bought into the dip as they anticipated the impending merger. The combination of the current version with the Beacon Chain is expected to take place in September this year.
Once completed, the merger will trigger the biggest shift in the blockchain industry in years due to the important role Ethereum plays in it. It will make popular applications built on Ethereum such as Aave, Uniswap and Compound faster and cheaper.
The price of Ethereum also rose due to strong inflows in the decentralized financial (DeFi) industry. Total value locked (TVL) across the industry rose from over $72 billion to about $85 billion. This was a strong recovery as the sector has been under heavy pressure in recent months.
The ETH price is now bouncing back for two main reasons. First, the US dollar index has pulled back slightly ahead of the impending FOMC decision. The bank is expected to publish the latest decision during the US session.
Analysts expect the bank to raise interest rates by another 0.75%. If this happens, it means the Fed will have raised interest rates by 225 basis points this year alone. The US dollar may be retreating as investors price in a less aggressive statement from Powell.
Ethereum price is also rising as the stock market recovers. Futures linked to the Dow Jones, S&P 500 and Nasdaq 100 rose more than 1% after mixed gains from companies like Microsoft and Google.
Ethereum Price Prediction
The 4H chart made a strong bearish breakout on Tuesday as the crypto sell-off accelerated. It hit a low of $1,356, the lowest level since July 18. The coin managed to break below the 25 and 50 day moving averages. At the same time, it invalidated the bullish flag pattern shown in black.
Now Ethereum price is trying to retest the bottom of the rising channel. This is known as a pause and retest pattern, which means that the currency is likely to have a bearish breakout in the near term. If this happens, the next key point to keep an eye on is $1,278.