etherThe post-Shanghai bull market has stalled.
Its price hit lows of $2,080 on Monday morning Bitcoin struggled to hold the $30,000 support level.
The uptrend may have been paused in part due to statements by the US Federal Reserve about another rate hike at the forthcoming May interest rate meeting.
Additionally, withdrawals from Ethereum staking contracts continue to outpace deposits, potentially increasing selling pressure on the asset, according to data from Nansen. Also, on April 15th, at 10am ET, there was a massive withdrawal of 85,393 ETH, followed by another withdrawal of 66,030 ETH an hour later.
ETH withdrawals and deposits as of April 17, 2023. Source: Nansen.
Ethereum’s price is up about 12% since the Shanghai upgrade last week. It enabled the withdrawal of staked ETH from the proof-of-staking chain, a feature that hasn’t been available since staking was introduced in December 2020.
The network quickly saw a strong inflow of deposits into the staking contracts and the market reacted positively to the successful change, with Ethereum making new yearly highs above $2,129.
However, on April 14, statements by Fed officials pointing to another rate hike in May strengthened the dollar. A strong dollar can negatively impact other, riskier assets like cryptocurrencies and stocks.
Interest rate hikes in sight
Christopher Waller, a member of the Fed’s executive board, and Atlanta Fed President Raphael Bostic told Reuters on Friday that the Fed may post another quarter percent gain before ending quantitative tightening to curb inflation.
The CME FedWatch tool, a survey of CME interest rate traders, currently estimates an 88.2 percent probability that the Fed will hike its interest rate.
Another rate hike also makes the dollar an attractive investment in terms of annual returns, which could potentially reduce the attractiveness of top cryptocurrencies like Ethereum for investors looking for stable yields.
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment or other advice.
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