After the last two Federal Reserve meetings held on June 14 and July 25, 2023, Ethereum (ETH) prices rose by 17% and 3%, respectively. On chain analysis explores how Ethereum prices respond to the upcoming Federal Reserve interest rate announcement in September 2023
After the last two Federal Reserve meetings held on June 14 and July 25, 2023, Ethereum (ETH) prices rose by 17% and 3%, respectively. On chain analysis explores how Ethereum prices respond to the upcoming Federal Reserve interest rate announcement in September 2023.
Between June 14th and 21st, 2023, the price of Ethereum (ETH) increased by 17% to $1900. The price rebound occurred after the Federal Reserve announced that it would keep the fund interest rate unchanged at 5.25% (10 consecutive rate hikes since March 2022).
Afterwards, the Federal Reserve raised interest rates by another 0.25% on July 25, 2023. Given that the rate hike was slightly lower than market expectations, ETH prices recorded a mild rebound of 3% at the end of the month.
Economists in a Reuters survey indicate that the Federal Reserve is expected to keep the fund interest rate unchanged at 5.50% again at the next Federal Open Market Committee (FOMC) meeting scheduled for September 19, 2023.
It is worth noting that Ethereum has recently risen by 7% in the past three trading days. On chain data analysis suggests that this may be a precursor to what is about to happen after the next Fed meeting.
The purchasing pressure for whales in the United States is increasing
As the next Federal Reserve meeting approaches, an important on chain indicator shows that US institutional investors have begun to increase purchasing pressure. The figure below shows that on September 13th, the Coinbase premium index hit 0.27, breaking through a positive value for the first time this month.
US whales may trigger an increase in Ethereum (ETH) prices | Coinbase premium index.
The Coinbase premium index of CryptoQuant shows the percentage difference between the spot prices of CoinbasePro and Binance exchanges. Although Coinbase Pro dominates the global retail spot market, it is mainly dominated by US institutional entities and high net worth investors.
The positive value of the Coinbase premium index indicates that US investors are increasing purchasing pressure on Coinbase.
The last time the Coinbase premium index broke through the 0.30 range was around July 13th. Subsequently, the price immediately rose to $1925. Strangely, since then, ETH has not attracted enough market demand to regain its position at $1930.
It remains to be seen whether the ETHCoinbase premium index will continue to rise as it did in mid July. If this situation occurs, it may also boost the confidence of retail investors and trigger price increases before the next Federal Reserve meeting.
Interestingly, the bullish activity surrounding ETH is not limited to the spot market.
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Bullish traders in the derivatives market are taking action
Although American whales seem to have started buying Ethereum, investors speculating in the derivatives market have also taken a positive attitude.
According to CryptoQuant data, the buy sell ratio of ETHMaker has exceeded positive and hit a two month high of 1.07 on September 14th.
US whales may trigger an increase in Ethereum (ETH) prices | receiver buy sell ratio.
CryptoQuant's TakerBuySell data describes the ratio of buying volume divided by selling volume in perpetual swap trading in the derivatives market. As shown above, when the ratio is greater than 1, it indicates that the recipient mainly buys more contracts than sells. This indicates that bullish sentiment in the Ethereum derivatives market may dominate purchasing pressure.
In short, the bullish sentiment in the spot and derivative markets may see an increase in ETH prices before the Federal Reserve meeting.
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ETH Price Forecast: May Retest $1900
If the Federal Reserve keeps the fund interest rate unchanged as expected, it may have a positive impact on Ethereum prices and other risky assets. From an on chain perspective, the goal of Ethereum holders may be to rise again to $1900.
The Fund In/Out (IOMAP) data around prices shows the distribution of entry prices for active Ethereum holders, which also confirms this position.
Data shows that 7.76 million addresses purchased 8.64 million ETHs at an average price of $1740. As shown below, they can provide important support.
But if the Federal Reserve keeps interest rates unchanged at 5.50% and the US whale continues to increase purchasing pressure as expected, bulls may overcome this resistance level and return to $1900.
ETH Price Forecast | Exchange Order Book
However, if bears regain control, they may try to fall into the $1500 range. However, as shown in the above figure, 3.6 million addresses purchased 7.5 million Ethereum at the lowest price of $1570. If they are HODL, ETH prices may rebound early.
But if that support level falls, ETH prices may fall towards $1500.
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