Ethereum Falls After Hong Kong ETF Launch
30 Apr, 2024 ● Coin news
On April 30, Ether's value fell by about 6% to a new low for the week of around $3,024.
This decline was part of a broader downturn in the cryptocurrency market, where the overall market cap decreased by about 4%.
Ether’s price drop was influenced by a tepid reception to the new crypto-linked spot exchange-traded funds (ETFs) in Hong Kong and expectations of a continued tough policy from the Federal Reserve.
The six crypto ETFs introduced in Hong Kong on Tuesday fell short of expectations, only achieving a total trading volume of $11 million, far below the predicted $100 million.
Of this volume, Bitcoin ETFs accounted for $8.5 million and Ether ETFs made up the balance.
This result is in stark contrast to the $655 million trading volume seen on the first day of the U.S.-based spot BTC ETFs, which launched on January 11. Since their introduction, these ETFs have drawn nearly $12 billion in investments.
However, there has been a recent slowdown in inflows, which has affected Bitcoin’s price increase and consequently dragged down related cryptocurrencies like Ether.
The decline in Ether's value today can also be linked to concerns that the Federal Reserve might maintain its stringent policy stance at the upcoming Federal Open Market Committee meeting on May 1.
According to data from the CME, expectations for interest rate cuts have been pushed back to later in 2024, with predictions now showing no more than two cuts by the end of the year.
This shift is primarily due to ongoing high inflation and a slow U.S. economy.
The crypto market typically shows declines before FOMC meetings, reflecting increased caution among investors.
For instance, the market value fell by over 10% before the March FOMC meeting and saw about a 5% decrease before the meeting in January.
Leading cryptocurrencies such as Bitcoin and Ether also saw drops.
This pattern demonstrates how investors adjust their investments to manage risks ahead of expected changes in monetary policy.
Today's decline in Ether is part of a broader downward trend, which seems to be forming a bull flag pattern.
A bull flag pattern typically forms during an uptrend as the price consolidates following a sharp upward move, creating a descending parallel channel marked by lower highs and lower lows.
As of April 30, ETH's price was retracing after it hit the upper trendline of a bull flag earlier in the week, with further decreases expected toward the lower trendline at approximately $2,760 in May.
This lower trendline coincides with both the 200-day exponential moving average (the blue wave) and a major resistance level from January 2024.
Completion of a bull flag occurs when the price decisively breaks above the upper trendline, often resulting in a continuation of the initial surge. If the pattern holds, ETH’s price could surge toward $5,250, which is a 75% increase from its current levels, by June.
Sources:
https://cointelegraph.com/news/why-is-ethereum-eth-price-down-today
