TL;DR Breakdown
- Market analysts anticipate that the Fed announcement will positively impact the price of ETH to above $2,000.
- Staking activity in the Ethereum ecosystem rose in June 2023 after reaching an all-time high in May.
- The ongoing SEC crypto crackdown has negatively affected the entire market, and there remain no guidelines.
Ethereum has shown resiliency in the face of market volatility, stabilizing at a price of roughly $1,750 due to increasing staking activity. The Federal Reserve (Fed) Rate announcement that will be made soon will impact the price movement of ETH. Additionally, the legal environment and market trends are impacting how well specific cryptocurrencies are performing.
How will the Fed Rate announcement affect the price movement of ETH?
According to market reports, Ethereum price has stabilized at roughly $1,750, down 3% from last week’s peak, amid heightened market instability. An in-depth examination of the on-chain data reveals that ETH has been spared a significant retracement due to increasing staking activity.
In contrast to the 13% fall in the market capitalization of all altcoins, ETH’s price has exhibited remarkable resiliency over the previous two weeks. The key drivers of the coin impressive performance have been rising staking activity and increasing demand from anxious altcoin investors. Currently, the markets have a 78% chance of a Fed rate delay.
Staking activity in the Ethereum ecosystem rose in June 2023 after reaching an all-time high in May. The Supply in Smart Contracts indicator from Glassnode counts the amount of ETH currently staked across different protocols as a percentage of the total coins of its kind in circulation.
An additional 360,000 ETH tokens were staked between June 1 and June 12 across the Ethereum Beacon chain and DeFi smart contracts.
The amount of a coin that may be traded across exchanges decreases as its supply under smart contracts grows. Positive ETH price behaviour will most likely result from this brief market scarcity.
On June 14, the US Fed will announce its upcoming interest rate decision. In the forthcoming weeks, ETH staking activity is anticipated to increase even more if the Fed makes the anticipated rate cuts or rate pause announcements.
ETH demand surges as per on-chain market analysis
The order books of exchanges imply that crypto traders are currently placing more orders to acquire more the second crypto, which is evidence of the bullish outlook. When there is more demand than supply for an item on exchanges, prices rise as buyers start to compete.
The report states that the Exchange On-Chain Market Depth chart displays the number of buy and sell orders. Crypto traders have ordered an additional 137,000 ETH tokens amid the turmoil in the altcoin markets. Sellers have only offered 122,000 ETH for sale in the meantime.
There is currently a 15,000 ETH supply deficit on all crypto exchanges. Holders of ETH are more interested in locking up their tokens in smart contracts to earn yield than selling at the current price. Additionally, a possible Fed Rate pause is likely to make these trends worse.
Bitcoin rebounds above $26,000 following SEC lawsuits against crypto exchanges
After losing some ground the week after the U.S. Securities and Exchange Commission (SEC) filed lawsuits against two of the biggest crypto exchanges, bitcoin increased to trade above US$26,000 on the open market. The American regulator claims that Binance.US and Coinbase violated the laws governing securities. The gains were also made by the other top 10 non-stablecoin cryptocurrencies, with Binance‘s native token, BNB leading the way.
In the 24 hours leading up to 4 p.m. in Hong Kong, bitcoin increased 1.00% to US$26,074. According to data from CoinMarketCap, the largest crypto in the world by market capitalization is up 1.32% for the week. The price of ether, the second-largest crypto after bitcoin, increased 0.64% to US$1,748 on the previous day. Over the past seven days, it has dropped 3.60%.
Despite suffering weekly losses of 15.1%, BNB, the native token of Binance, increased by 5.10% to US$235. The gains follow U.S. Republican Congressman Warren Davidson’s tweet on June 12 that he had submitted a measure to reform the SEC and oust Gary Gensler as chairman.
Gary Gensler, the chairman of the SEC, reiterated the organization’s commitment to tightly regulating the cryptocurrency industry in a Twitter retweet of his previous remark.
Three of the cryptocurrency tokens identified by the SEC as securities—Solana, Polygon, and Cardano—all experienced gains in the afternoon. However, the week after the SEC crackdown began, all three experienced losses of over 20%.
Cardano increased 0.28% to US$0.2795, while Solana increased 2.14% to US$15.42 in 24 hours. Up 2.39% to US$0.6459, Polygon.
Market analysts point out that the recent lawsuits filed by the SEC against Binance and Coinbase indicate a significant shift in regulatory approach towards the digital asset industry.
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