Ethereum Trades Sideways Amid Fed Uncertainty, Bearish Outlook
2min read Ethereum (ETH) has been trading sideways around the $1,600 mark, with traders closely monitoring trade war developments and comments from Federal Reserve policymakers. The cryptocurrency experienced significant volatility earlier this month, dropping from highs near $2,000 to lows below $1,400. Despite this volatility, recent trading sessions have seen a calmer price action.
However, chart analysis indicates a bearish outlook for Ethereum. The cryptocurrency continues to trade below its major moving averages, including the 21-day moving average (21DMA), which has acted as strong resistance in recent months. Some analysts, such as Ted Pillows, suggest that a near-term breakout could be imminent. Pillows expects Ethereum to hold the $1,550-$1,600 level and anticipates a breakout above $1,670, which could lead to a rally towards $2,000.
Despite these optimistic views, the macroeconomic environment remains uncertain. Fed Chair Jerome Powell highlighted the risks posed by the trade war, which could simultaneously hurt economic growth and push inflation higher. These remarks were interpreted by some analysts as "hawkish," signaling that the Fed may not rush to cut interest rates to support a weakening economy. This uncertainty tilts the risks towards further losses for risk assets like stocks and altcoins, including Ethereum, in the coming weeks and months.
While Ethereum's near-term outlook appears bearish, there are indications that the cryptocurrency could be poised for a major recovery. Mister Crypto noted on X that Ethereum has fallen below its realized price, presenting an "amazing buying opportunity." Historically, investors who bought Ethereum near or below its realized price have made significant profits. Ethereum remains the dominant DeFi chain, far ahead of rivals like Solana or Tron in terms of total value locked in smart contracts.
Additionally, Ethereum has strong support from the pro-crypto administration, with Trump's family being known holders of the cryptocurrency. This support, along with Ethereum's dominance in the DeFi space, positions it well to lead the recovery when the crypto market rebounds. Prior alt-coin seasons have occurred during periods of high liquidity and reduced economic uncertainty, typically following a crisis and a decisive response from central banks.
Currently, the market is not yet at this point. A tariff-induced recession and a decisive Fed response, such as zero interest rates and quantitative easing (QE), are necessary before an alt-season can occur. In the meantime, savvy investors are advised to accumulate Ethereum at discounted prices, as it is likely to hit new record highs before the end of the current administration's term, which is over three times the current levels.
Investors are also encouraged to consider accumulating Solana, one of Ethereum's biggest rivals. The Solana blockchain has established itself as the go-to platform for retail trading activities like meme coin trading, giving it a strong narrative for a comeback when macro conditions improve. Solana could easily triple from current levels before the end of the administration's term, similar to Ethereum.
An exciting new Solana project, Solaxy (SOLX), could outperform even Solana. Solaxy, the first layer-2 Solana scaling blockchain, has raised over $30 million for ecosystem development since the launch of its presale earlier this year. This early momentum is crucial for a new project to establish its ecosystem and achieve long-term success. Readers interested in learning more about Solaxy and its presale can follow the project on X and Telegram. Solaxy's smart contract has already passed major audits, including with Coinsult.
