Ethereum Surges 13% to $2,048 as Fed Rate Hold Boosts Crypto Market

Ethereum's price has surged past the $2,000 mark, driven by a broader market rally following the Federal Reserve's decision to maintain interest rates at 4.25% to 4.50%. This move has made crypto assets more attractive to investors, with Bitcoin also reaching the $100,000 level. However, experts warn that short-term holders (STHs) might soon sell to take profits, potentially leading to a price reversal. This concern is supported by a decline in key on-chain activity, which could indicate a shift in market sentiment.

In the past 24 hours, Ethereum's price has risen above $2,000, recovering from losses linked to earlier tensions. The surge in Ethereum's price has led to an 18% jump in open interest, now totaling $24.8 billion. This increase in open interest suggests that traders are becoming more active in the Ethereum market, potentially driving further price movements.

Ethereum's recent gains are partly due to increased interest from large investors since April. Some believe the Pectra upgrade, launched on May 7, helped boost the price. However, the current buying demand in the crypto market might not last long. Data shows the MVRV ratio has dropped to 0.888, meaning many investors are selling at a loss even though prices are rising. This kind of panic selling could encourage more selling and lead to a downturn.

Despite the price rise, nearly half of all Ethereum wallets, about 65.5 million, are still holding at a loss. This indicates that a significant portion of investors are still underwater, which could lead to further selling pressure if the price continues to rise. However, some major players are buying, possibly to benefit from the surge and earn market-making fees. Wintermute made large purchases in the last 24 hours, and Abraxas Capital withdrew over 41,000 ETH (worth $75M) from exchanges.

Sellers are having a hard time pushing Ether below its moving averages, which suggests there’s not much pressure to sell during the upward rally. Buyers are holding the price around immediate resistance line. As of writing, ETH price trades at $2,048, surging over 13% in the last 24 hours. Buyers may use this as a chance to break through the resistance at $2,109. If they succeed, the ETH/USDT pair could gain momentum and head above the $2,500 level. There’s a smaller hurdle at the immediate 23.6% Fib level, but it’s expected to be overcome.

On the flip side, sellers will likely try to drag the price below the moving averages. If that happens, ETH could drop to $1,734. Buyers will probably step in there, but if they can’t hold that level, the price might fall further to key support at $1,542. As the RSI trades within the overbought region at level 78, ETH price is poised for a short-term downward correction.