- Ethereum price has pulled back in the past few days as the rally lost momentum.
- Bitcoin price has also retreated from about $45,000 to about $41,000.
- Traders have rotated to other tokens like Solana and Avalanche.
Ethereum price rally has lost momentum recently as investors focus on its key competitors like Solana and Avalanche. ETH retreated to a low of $2,173 on Monday, much lower than the year-to-date high of $2,402. Similarly, Bitcoin has fallen from the YTD high of $45,000 to $41,000.
Why is ETH retreating?
Ethereum and other altcoins are under intense pressure as investors question the dovish tone by the Federal Reserve. In its monetary policy meeting last week, the Fed left interest rates unchanged between 5.25% and 5.50%.
The bank also signaled that it will deliver three rate cuts in 2024. Such a dovish tone is a good thing for Bitcoin and other cryptocurrencies like Ethereum, Solana, and Cardano.
However, there are still some concerns about whether the Fed will start cutting rates since the economy is doing well. The GDP expanded by 5.2% in the third quarter while analysts see it having a strong Q4.
Some Federal Reserve officials have already cautioned about the dovish tone and the next phase of rate cuts. In a statement on Friday, New York Fed’s John Williams said that the Fed still had more work to do in its fight against inflation.
In a separate interview on Sunday, Chicago’s Austan Goolsbee said that it was too early to speculate whether the Fed will start cutting rates. He cited the fact that inflation remained a thorn in the flesh in the US, as the core Consumer Price Index (CPI) remained at 4% in November.
Ethereum price has also retreated as investors have focused on other altcoins. Avalanche token has jumped by more than 350% from its lowest point this year. Similarly, other tokens like Benqi and Trader Joe have also jumped. Solana has also roared back as Bonk has done better than Ethereum’s Shiba Inu.
Ethereum price forecast
The daily chart shows that the ETH price has pulled back in the past few days. It has retreated from the YTD high of $2,402 to $2,172. Still, it remains above the important support level at $2,140, the highest point on April 16th.
Ethereum has jumped above the 50-day and 100-day Exponential Moving Averages (EMA). At the same time, the Relative Strength Index (RSI) and the Stochastic Oscillator have pointed downwards.
Therefore, I suspect that the coin has formed a break and retest pattern, which is a bullish sign. This means that it could still bounce back and retest the YTD high of $2,402 as the Santa Claus rally resumes.
