For the first time in three weeks, on Jan. 9 the price of ETH rallied 2.85% to cross above $1,325, a key level that could pave the way for the token to $1,350 below if its previous price performance serves as an indication.
In the same period, the cryptocurrency market capitalization gained 2.66%, or $21.18 billion.
At signs of cooling inflation, investors jump into riskier markets.
The US Department of Labor’s non-farm payrolls report for January 6 showed a slowdown in wage increases, which market watchers interpreted as a sign that the hawkish policy of the Federal Reserve has succeeded in lowering the inflation.
This scenario could lead the Federal Reserve to slow down the pace of rate hikes, which in turn could turn out to be bullish for crypto assets like Ether.
In the next few months, inflation will continue to come down which the Fed will stop, eventually balancing it by getting the markets to go higher. Once the Fed begins to ease, we will enter phase 2 of the inflation saga. People don’t really seem to understand how sticky inflation is.
This January 12, the market awaits the new data to be published on consumer prices in the United States. The figures will set the tone for the two-day meeting of the Federal Open Market Committee that begins on January 31. CME data signals a market consensus for a 50-75 basis point rate hike from February.
Ethereum options traders have increased their confidence in a possible price rally in the first quarter of 2023, as macro indicators turn bullish in the short term for risk markets.
According to data tracked by Glassnode, Ethereum open interest for contracts expiring on March 31 is mostly bullish, with most attack targets within the $3,500-$4,000 range.
The bullish outlook gets a further boost from Jiang Zhuoer, CEO/co-founder of Bitcoin (BTC) mining service B.TOP, who believes that Ether would permanently break its current lower range anytime between March and May 2023, citing his offer. deflationary in recent months.
“Looking at the Ethereum data, the inflation rate was 3.59% when ETH was in Proof-of-Work (POW). The Bitcoin inflation rate is 1.72%,” he wrote, adding:
“Even after the bear market, with the dormant coin burning, the ETH inflation rate is as low as 0.01% […] From these data, it can be concluded that the ETH bull market will start in a deflationary mode spiral”.
Still, the Fed would need to see a sustained reduction in inflation before halting its wave of rate hikes, warns Edward Park, chief investment officer at London-based Brooks Macdonald.
Since the high was reached in December 2021, the price has moved in a descending channel to date. It is estimated that the price will continue to rise from here OR form a double bottom before the next momentum move.
Investor risk sentiment could decline again if that does not happen, which could send Ether back below $1,000 in such a scenario, potentially forming a double bottom.
Posted by Cryptobtcbrowser, news and information agency.