Ethereum is experiencing a sharp decline amid ongoing quantitative tightening, reminiscent of the 2019 scenario.
Ethereum's Regression Band Breakdown
Currently, Ethereum is trading around $2,061.26, facing a significant decline after losing wedge formation support. The green regression channel, historically marking Ethereum's long-term growth, now serves as a crucial support zone. Additionally, a yellow symmetrical triangle, representing market consolidation, was previously broken to the upside. However, Ethereum has retraced and fallen below its lower boundary, signaling potential weakness and increasing the probability of testing lower support levels within the regression band.
Will the Fed End QT Soon?
Crypto analyst Benjamin Cowen suggests that the Federal Reserve could end quantitative tightening in the coming months. Historically, the conclusion of QT aligned with Ethereum's bottom and spurred price rebounds. If the Fed shifts its policy, liquidity could improve, supporting Ethereum's price recovery.
Macroeconomic Impact on Ethereum
The macroeconomic indicator, reflected by a blue trend line, has been on a downtrend since 2022. This trend aligns with Ethereum's declining momentum, reflecting a high correlation between liquidity conditions and prices. As financial conditions tighten, Ethereum faces increasing pressure, highlighting long-term support levels.
Despite current challenges, a potential policy shift by the Federal Reserve could enhance liquidity and support Ethereum's recovery, making the crypto market one to watch.
