Ethereum's 10% Jump After Fed Hike: Will History Repeat?

Last Updated July 27th 2023
10 Min Read
  • Ethereum's price has historically increased following US Federal Reserve rate hikes, with a 10% spike after the last hike in May 2023. The recent rate hike could potentially trigger a similar reaction.
  • Investor activity and transaction volumes on the Ethereum network have shown an uptick in anticipation of the recent rate hike, indicating a bullish market sentiment.
  • If Ethereum follows its previous trend, it could potentially reclaim the $2,000 price point, but it must first overcome the $1,900 resistance level. In a bearish scenario, Ethereum could drop towards $1,750.

Ethereum's Dance with the Fed Rate Hike

In the world of cryptocurrencies, market movements can often feel like a rollercoaster ride. One such twist is Ethereum's (ETH) reaction to the US Federal Reserve's rate hikes.

The last time the Fed increased rates in May 2023, Ethereum didn't just hold steady - it leapt up by a whopping 10%. Now, with another rate hike on the horizon, the question on everyone's mind is: will Ethereum repeat its stellar performance?

A Look Back at Ethereum's Price Performance

To understand the potential impact of the upcoming rate hike, let's take a trip down memory lane. Ethereum's price history reveals a fascinating pattern.

Following the last two rate hikes on March 22 and May 3, 2023, Ethereum didn't just survive - it thrived, making significant gains each time.

Ethereum Investors: Bullish Moves on the Horizon?

On-chain data, the digital footprint of transactions on the blockchain, paints an intriguing picture of investor behaviour. As whispers of a potential rate hike began to circulate, Ethereum investors started making some bullish moves.

Exchange Supply: A Dip, then a Rise

In the lead-up to the rate hike, Ethereum's exchange supply - the number of tokens investors have deposited in exchange wallets - dropped to a 5-year low of 11.07 million ETH on July 17.

However, as the rate hike became a reality, the Ethereum ecosystem began to stir. Between July 22 and July 27, the ETH exchange supply increased by 40,000 coins, signaling a potential uptrend in market participation.

Ethereum's Transactional Activity: A Surge in the Making?

Ethereum's transaction volumes have also seen a noticeable spike this week. On July 22, 1.14 million ETH were transacted on the Ethereum network.

Fast forward to July 27, and that figure has climbed to 1.88 million ETH, marking a 65% surge in transactional activity in just one week, making Ethereum a no-brainer crypto to buy.

Ethereum Price Forecast: A $2,000 Milestone on the Cards?

If Ethereum follows the same trajectory as it did during the previous rate hikes, we could see a 5% to 10% rally. This could push Ethereum's shrinking supply price to reclaim the $2,000 mark.

However, it's not all smooth sailing. Ethereum will first have to overcome the $1,900 resistance level, a hurdle that has proven challenging in the past.

The Bullish and Bearish Scenarios

In the bullish scenario, Ethereum has the potential to quickly regain the significant milestone of $2,000, especially if the anticipated Fed rate hike further propels the momentum. However, caution remains as the bears retain the potential to exert their influence.

A dip in Ethereum's price below $1,800 could potentially trigger a modest retracement.

But fear not; the $1,850 support level could offer bullish support to prevent a significant loss. If that support level fails to hold, Ethereum could drop toward $1,750.

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