Fed Rate Announcement: Can it Propel Ethereum (ETH) Above $2,000?

Amid heightened market turbulence, Ethereum (ETH) price has consolidated about $1,750, down 3% from last week’s peak. An in-depth analysis of the on-chain data shows that increased staking activity has helped ETH avoid drastic retracement. How will the upcoming Fed Rate announcement impact ETH price action?

Compared to the 13% decline in the global altcoin market capitalization, Ethereum (ETH) price has shown significant resilience over the past two weeks. Growing demand from concerned altcoin investors and rising ETH staking activity have been pivotal to ETH’s strong performance.

Currently, the markets have priced in a 78% possibility of a Fed Rate pause. How could the impending Fed Rate announcement impact ETH price action in the coming weeks?

Ethereum Staking Activity Still on the Rise

After reaching an all-time high in May, staking activity across the Ethereum ecosystem has continued to rise in June 2023. Glassnode’s Supply in Smart Contracts metric measures staking activity by tracking the percentage of total ETH in circulation that is currently staked across various protocols.

Between June 1 and June 12, crypto investors have staked another 360,000 ETH coins across the Ethereum Beacon chain and DeFi smart contracts.

Ethereum (ETH) Price Action, June 2023. Supply in Smart Contracts. Source: Glassnode

When a coin’s Supply in Smart Contracts increases, it reduces the amount available to be traded across exchanges. This momentary market shortage is likely to trigger positive ETH price action.

Notably, United States Fed will announce the next Interest Rate decision on June 14. If the Fed announces rate cuts or a rate pause, as expected, ETH staking activity is expected to rise even further in the coming weeks.

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Crypto Traders are Queuing Up to Buy ETH

In further confirmation of the bullish outlook, the order books of exchanges suggest that crypto traders are currently piling more orders to buy more ETH.

The Exchange On-Chain Market Depth chart shows an aggregate of the total buy/sell orders from Ethereum traders across different crypto exchanges.

Amid the shake-up in the altcoin markets, crypto traders have placed orders to purchase another 137,000 ETH coins. Meanwhile, sellers have only put up 122,000 ETH for sale.

Ethereum (ETH) Price Action, June 2023 – Aggregate Exchange Order Books. Source: IntoTheBlock

When demand for an asset exceeds the supply available on exchanges, it puts upward pressure on price as buyers begin to compete.

Currently, there is a supply shortage of 15,000 ETH across crypto exchanges. Rather than sell at current prices, ETH holders are more interested in locking up their tokens in smart contracts to earn yield. And a potential Fed Rate pause is likely to exacerbate these trends further.

In conclusion, these critical factors could see ETH price witness positive price action in the coming weeks.

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ETH Price Prediction: The $1,850 Resistance is Critical

Considering the aforementioned factors, Ethereum’s price will rise toward $2,000 if a Fed Rate pause is announced. However, for the bulls to be confident of a positive price action, ETH must clear the initial resistance at $1,850.

According to IntoTheBlock’s In/Out of The Money Around Price (IOMAP) data, 3.38 million investors that bought 10.97 million ETH at the average price of $1,835 could trigger a pullback.

But if ETH scales that resistance zone, it could make its way toward the $2,000 price target.

Ethereum (ETH) Price Prediction, June 2023 – IOMAP. Source: IntoTheBlock

​​On the other hand, the bears could invalidate the bullish ETH price recovery if it unexpectedly drops below the critical $1,700 support zone. Although, the 1.23 million investors that purchased 1.79 million ETH at the minimum price of $1,700 will likely prevent the drop.

However, if that support level cannot hold, ETH’s price could still retrace toward $1,595.

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