ETH Pullback Deepens

Ethereum prices continue to correct sharply lower this week. On the back of near 100% rally put in over the year-to-date highs, prices ran into selling pressure last week and have now shed around 25% from that peak. The move comes amidst a broader pull back in the crypto market after Bitcoin reversed from posting fresh all-time highs last week. Many have attributed the move to profit taking and a simple clearing of the order book given the ferocious rally we’d seen I prior weeks. However, chatter of a bubble in crypto and a potential market top has fuelled uncertainty among retail investors and institutional traders alike with massive outflows seen from crypto funds this week.

FOMC Uncertainty

Focus this week is also on the US Dollar with uncertainty ahead of the March FOMC adding to bearish sentiment for crypto. Traders are fearful that a less dovish outlook from the Fed will lead to a fresh rally in the US Dollar, stripping demand for risk assets. Today, traders will be looking to see if the Fed makes any adjustment to its dot-plot forecasts. If the three projected rate cuts are maintained, this should keep USD upside muted, allowing crypto to rebound. However, if the forecast is lowered to two projected cuts this will likely fuel a breakout higher in USD, weighing on crypto near-term.

Technical Views

ETH

The weekly chart reflects the scale of the reversal lower in ETH. Price has broken below 3582.5 and is now fast approaching a retest of the broken bull channel highs and support at 2633. Bulls need to defend this area to keep the focus on a fresh push higher near-term or risk a deeper correction into the bull channel lows and 2014.