The Ethereum price has found a strong resistance ahead of the upcoming US consumer price index (CPI) data scheduled for Wednesday. The ETH token is trading at $3,460, which is about 5.78% below the highest level this month. Its total market capitalisation has dropped to more than $407 billion.
Ethereum and Bitcoin divergence
Historically, Bitcoin tends to have a close correlation with Ethereum. As such, ETH price rallies when there is strong BTC demand.
This correlation has diverged this week. On Monday, the price of Bitcoin jumped to a five-month high of $57,000. In the same period, Ethereum remained under pressure below the important resistance level at $35,000. This divergence also happened between Bitcoin and other altcoins.
This divergence is happening because of the factors that are driving Bitcoin. In the past few weeks, Bitcoin has jumped because of the rising hopes that the Securities and Exchange Commission (SEC) will approve a Bitcoin Exchange Traded Fund (ETF). If that happens, there is a likelihood that more companies will seek approvals for Ethereum ETFs.
It has also rallied because of the rising hashrates, which mean that miners are still working. A few months ago, the hashrate declined after China intensified its crackdown on mining.
Looking ahead, the next key catalyst for the ETH price will be the latest US consumer inflation data that will come out on Wednesday. The data is expected to show that consumer prices in the country remained at elevated levels in September. As such, there is a likelihood that the Federal Reserve will start tightening faster than expected.
At the same time, Ethereum price is being supported by the DeFI and NFT industries. For example, the total value locked in Ethereum’s DeFi platforms has jumped to more than $140 billion. Similarly, activity in the NFT industry is continuing to increase.
Ethereum price prediction
The four-hour chart shows that the Ethereum price has struggled in the past few days. A closer look shows that this price action is happening by design. For one, it happened when the price rose to a high of $3,675. This was notable since this was the same price where it was on September 16.
The price has formed what looks like a cup and handle pattern. Therefore, this drop is part of the handle formation, which means that it will soon rebound.
