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- Ethereum (ETH) has also increased by around 4% in the past week, but overall market sentiment remains weak.
- Hawkish signals from the Federal Reserve have dampened expectations of interest rate cuts and an increase in risk factors.
Ethereum’s recovery faces headwinds
Ethereum has posted a modest recovery of 4% in the past seven days as the cryptocurrency market regained its strength.
However, the jump did little to improve sentiment overall, which remains depressed due to the worsening economy.
Investor confidence also took a hit after Federal Reserve Chairman Kevin Warsh expressed concern over rising inflation.
His comments suggest that monetary policy may remain restrictive for a longer period of time, fueling concerns that an interest rate hike could be on the table.
The move has defied earlier expectations that the Federal Reserve would start cutting rates this year, creating less room for risky assets like cryptocurrencies.
At the start of the year, most analysts expected a rate cut or two from the Federal Reserve. Those expectations have fallen sharply as inflation continues to run above the central bank’s target.
Warsh’s comments also fueled concerns that policymakers remain focused on controlling inflation, despite the positive performance in financial markets.
Historically, high interest rates have reduced the liquidity and sensitivity of speculative investors, making cryptocurrencies more vulnerable during periods of high liquidity.
Ethereum faces a large area of resistance
Ethereum’s recent recovery was stopped near the $1,800 level, an area that was previously used as support but has now become a strong resistance area.
If the selling pressure continues and ETH fails to recover $1,800, the next major support area lies near the April 2025 low of $1,400.
Moving to that level would represent a decrease of 18% from the current prices and further increase the loss of Ethereum for the year.
Among the largest cryptocurrencies, Ethereum has been one of the weakest performers, even lagging behind competitors such as Solana during the current market.
The Relative Strength Index (RSI) has risen from the oversold but remains weak.
Currently hovering around 40, the indicator is approaching levels that could strengthen bearish power if selling increases.
In the overview of the history of the exchange of Ethereum to Ethereum, you can see the history of the price change.
Unless buyers successfully push the price above $1,800, analysts expect the decline to remain, increasing the likelihood of retesting lower support areas.
