Ethereum failed to settle below the psychologically important $3,000 level, but it is yet to prove that it has enough support in the near term.
Ethereum received support near the $3,000 level and is trying to rebound while the crypto market attempts to recover after the recent pullback.
Ethereum Moves Higher As Bitcoin Fails To Settle Below $40,000
Ethereum has recently found itself under significant pressure as fears over Fed’s future rate hikes triggered a sell-off in riskier assets. The culmination of this sell-off was Bitcoin’s attempt to settle below the psychologically important $40,000 level.
Bitcoin did not manage to settle below $40,000, which immediately served as an upside catalyst for other leading cryptocurrencies and allowed them to move away from recent lows.
Meanwhile, shorter-term Treasury yields continued to move higher as traders bet that Fed may raise rates 4 times in 2022. However, it remains to be seen whether the continuation of current trends in U.S. bond markets will put massive pressure on cryptocurrencies.
While higher rates are bearish for riskier assets, the Fed’s rate will remain very far from the neutral level even after 4 rate hikes as the upcoming U.S. inflation report is projected to show that Inflation Rate was 7% year-over-year in December 2021.
It will be interesting to see whether markets focus on a knee-jerk reaction to higher Treasury yields or take a look at the big picture and realize that Fed’s policy will stay accommodative for many months or even years.
Ethereum Needs To Settle Above $3,170 To Gain Upside Momentum
Ethereum did not manage to settle below the support level at $3,000 and rebounded closer to the resistance level at $3,170.
In case Ethereum gets above this level, it will gain upside momentum and move towards the next resistance level at $3,275. A move above this level will push Ethereum towards the resistance at $3,400.
On the support side, Ethereum needs to settle below $3,000 to have a chance to gain downside momentum in the near term. RSI has recently moved back into the moderate territory, so there is enough room to gain downside momentum in case the crypto market sell-off continues.
The next support level for Ethereum is located at $2,950. If Ethereum declines below this level, it will head towards the support at $2,850.