Ethereum price moved sideways on Monday as focus shifted to the upcoming Fed decision and US inflation data. ETH was trading at $1,256, where it has been in the past few days. This price was about 4.85% below the highest level last week.
Fear and greed retreats
Ethereum price has been in a consolidation phase in the past few days as the fear and greed index pulled back from last week’s high of 65 to the current 59. This decline happened as investors waited for the upcoming interest rate decisions by the Federal Reserve and US inflation data.
Economists expect that the latest inflation data to show that the headline CPI dropped from 7.7% in October to 7.3% in November. They also expect that core inflation slipped from 6.5% to 6.2%.
Recent data shows that key parts of inflation have been in a downward trend. For example, gasoline has dropped to the lowest level in more than 12 months. Clothes and furniture prices have also fallen while sea-freight shipping drop sharply as demand fell.
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Inflation is an important measure for Ethereum prices because of its impact on the Federal Reserve. Economists expect that the Fed will hike rates by 0.50% in its final meeting of the year. If this happens, it will be the smallest rate hike in a while. It has hiked rates in four straight meetings.
Ethereum prices tend to do well in a period of low-interest rates. This explains why ETH and other cryptocurrencies soared to a record high of near $5,000 in 2021.
Meanwhile, ecosystem data shows that the total value locked (TVL) in Ethereum’s DeFi ecosystem dropped to $40 billion from a peak of over $150 billion. Similarly, the volume of NFTs in Ethereum’s ecosystem has dropped from its peak.
Ethereum price prediction
The 4H chart shows that the ETH price has formed an inverted head and shoulders (H&S) pattern. In analysis, this pattern is usually a bullish sign. ETH/USD price is also consolidating at the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved below the neutral point of 50. Volume remains low.
Therefore, there is a likelihood that Ethereum price will soon have a bullish breakout as buyers target the key resistance point at $1,400. This view will be confirmed if the price manages to move above the resistance point at $1,312.