- Ethereum price has pulled back in the past few days.
- Focus shifts to the upcoming US consumer inflation data.
- The VIX index has dropped to the lowest point since April.
Ethereum price retreated on Wednesday as investors focused on the upcoming US inflation data and the falling NFT volume. ETH token dropped to a low of $1,692, which was about 75 below the highest point this year. It has a total market cap of over $202 billion.
VIX index retreats
Ethereum price has been in a strong bullish trend in the past few weeks as investors wait for the upcoming merge. Merge is a situation where the proof-of-work (PoW) blockchain will combine with the Beacon Chain.
The end result will be that ethereum will become a modern smart contract platform that is significantly faster and highly secure. It will also have substantially low gas fees than the existing platform. As a result, apps built using the network like Aave and Uniswap will see more activity after this upgrade.
Ethereum price dropped on Wednesday as investors focused on the upcoming American inflation data. Economists expect the data to show that the headline consumer price index (CPI) declined from 9.1% in June to 8.7% in July this year.
Inflation has an important impact on ethereum and other cryptocurrencies because of the important role that the Federal Reserve plays. The Fed has already hiked rates by 225 basis points this year and warned that it will continue hiking.
Therefore, if inflation falls at a faster pace than expected, it will mean that the Fed could slow its rate hikes. Such a move will be positive for risky assets like cryptocurrencies and stocks.
Meanwhile, the closely watched VIX index has retreated to the lowest level since April of this year. The VIX is the most widely used inflation gauge in the market. The recent crash of the VIX has coincided with the strong recovery of ETH prices.
Further data shows that total Ethereum NFT sales and buyers have declined sharply in the past few weeks. Total sales dropped from over $2.7 billion in May to about $535 million in August.
Ethereum price prediction
The four-hour chart shows that ETH price has moved sideways in the past few days. It has consolidated along the 25-day and 50-day moving averages while the MACD is nearing the neutral point. At the same time, the pair has formed an ascending channel pattern that is shown in green.
The coin will likely resume the bullish trend as bulls target the important resistance point at $1,823. A drop below the support at $1,620 will invalidate the bullish view.
