- Ethereum price has moved into a correction zone.
- The sell-off is in line with the performance of Bitcoin and other coins.
- US ETFs like QQQ and SPY have all surged to a record high.
Ethereum price has pulled back in the past few days as sentiment in the crypto industry has waned a bit. After peaking at $2,717 on January 12th, the coin has moved into a correction, falling by over 10%. It has dropped to its lowest point since January 10th.
Risk-on sentiment
Ethereum, Bitcoin, and other cryptocurrency prices have plunged in the past few days as investors sell the spot Bitcoin ETF news. This is a common occurrence where an asset rallies ahead of a major event and then pulls back after it happens. It happens because the news event, in this ETF approval, was already baked in the market.
Still, there are a few potential catalysts that could push Ethereum price higher soon. First, investors are embracing a risk-on sentiment as evidenced by the performance of the stock market. Last Friday, Invesco QQQ (QQQ), which tracks the Nasdaq 100 index and the SPDR S&P 500 index (SPY) jumped to a record high.
These indices jumped as the earnings season continued last week. Some of the notable companies that released their results last week were Goldman Sachs, Morgan Stanley, and some regional banks. The earnings season will continue this week as companies like P&G, Tesla, and Netflix publish their results.
The surge in America’s equities is a sign that investors have embraced a risk-on sentiment, which is a positive thing for stocks and cryptocurrencies. In most periods, these coins tend to rally when there is this sentiment as we saw during the 2021 rally.
The other catalyst for Ethereum is that some companies like Blackrock have applied for a spot Ethereum ETF. That ETF will track the price of Ethereum and make it easier for institutional investors to invest.
However, it is not clear whether the SEC will approve the ETF because of Ethereum’s staking features, which it introduced in 2022. Staking allows people to earn a return by just holding the tokens, something the SEC sees as problematic since Ethereum is not regulated.
Ethereum price forecast
The daily chart shows that the ETH price has pulled back sharply in the past few days, pushing it into a correction. It has retested the key support at $2,450, the highest swing on December 28th. At the same time, the Relative Strength Index (RSI) and the Stochastic Oscillator have retreated to their neutral point.
Ethereum remains above the 50-day and 100-day Exponential Moving Averages (EMA), a bullish sign. Therefore, the outlook for ETH price is mildly bullish, with the next point to watch being at $2,700. This price is about 12% above the current level.
