Ethereum Price Forecast: Potential $500M ETF Outflows Impact on $3,000 Retest
Ethereum faced fluctuations nearing the $3,100 mark on August 1, 2024, following a negative response to the US Federal Reserve’s decision to maintain the monetary policy interest rate between 5.25% and 5.5%. This move had adverse effects on various markets, including stocks and cryptocurrencies.
The announcement led to ETH retracing gains made during the recent market excitement spurred by ETF launches and remarks from Donald Trump. ETFs experienced four consecutive days of outflows this week, following dovish reports on the latest Non-Farm Payrolls (NFP) and Consumer Price Index (CPI) released on July 5. Many crypto investors had anticipated a rate cut by the US Fed on July 31, which did not materialize.
Subsequently, liquidations cascaded across the crypto sphere, causing ETH prices to plummet towards $3,100. The chart analysis indicates a 15.08% decline in ETH’s value around noon (Eastern Time) on August 1. In contrast, the TOTAL3 chart reveals that the global altcoin market decreased by less than 10% during the same period, suggesting that Ethereum’s price lagged behind the average performance of the altcoin sector since the week began.
With Ethereum now trailing the broader market trend, strategic investors may view it as undervalued. If they choose to leverage the discounted ETH prices by initiating new positions, ETH prices could potentially witness a significant upsurge in August. However, investors will closely monitor the performance of ETFs as they complete their first full month of trading.
Drawing parallels with Bitcoin’s trajectory following the launch of its ETF in January, it took until March 2024 for BTC to experience a substantial price surge amid inflows from newly introduced derivative assets. If Ethereum follows a similar pattern, it could breach key resistance levels in August, potentially setting the stage for a breakout, particularly if the US Fed reduces rates in September as widely predicted.
Analyzing Ethereum’s recent price movements, the daily chart suggests a possible bearish continuation despite initial gains. After a notable 15.08% increase over three days, reaching $3,396.01, Ethereum encountered strong resistance, leading to a sharp decline. Presently, ETH is trading at $3,106.58, indicating a 3.87% drop on August 1.
Technical indicators like the Parabolic SAR dots signal a bearish trend, hinting at a potential continuation of downward momentum unless a significant reversal occurs. Ethereum faces immediate resistance at $3,499.01, with a more substantial barrier at $3,600. Failure to breach these levels could exert further downward pressure on the price.
On the downside, Ethereum is approaching a crucial support level at $3,000, with a break below potentially intensifying the bearish trend towards the next support at $2,800. The Average Directional Index (ADX) currently stands at 20.94, indicating a weak trend that could strengthen if the ADX surpasses 25.
While the introduction of ETH ETFs initially boosted sentiment in late July, the prevailing trend leans bearish unless significant resistance levels are surpassed. Investors should monitor the $3,000 threshold closely, as breaching it could signal a deeper correction.
