Ethereum Crushed by Interest Rate Freeze, Can it Hold the $2,211 Support Line?

▲ Ethereum (ETH)/AI-generated image ©

As the hawkish interest rate freeze bomb from the U.S. Federal Reserve slammed the virtual asset market, a flood of supply poured into exchanges and institutional capital outflow from the U.S. accelerated, plunging altcoin leader Ethereum into a deep mire, falling below $2,300.

According to investment specialized media FXStreet on April 29 (local time), the price of Ethereum (ETH) slipped below $2,300 after the U.S. Federal Reserve froze its benchmark interest rate at 3.50% to 3.75% on Wednesday, revealing a hawkish stance. This decision was made by an 8-4 vote among committee members, with three regional Federal Reserve bank presidents urging the removal of dovish language from the statement, showing strong resistance to future rate cuts. This outlook sharply froze investment sentiment for risk assets like virtual assets.

As a result of the interest rate freeze, selling pressure intensified, and exchange reserves are showing a steep upward curve. In just three days this week, approximately 226,000 units of supply flowed into exchanges. According to crypto analytics firm Lookonchain, wallets associated with Fenbushi Capital and Genesis Trading moved massive amounts to exchanges over the past 24 hours, with 10,000 units moving from a wallet of an early coin offering participant that had been dormant for 11 years, continuing the trend where individual investors sold over 750,000 units last week.

U.S. investor interest is also noticeably cooling. The Coinbase Premium Index, which indicates demand from U.S. investors, has turned negative, and according to SosoValue data, U.S. Ethereum spot ETFs also recorded net outflows for two consecutive days at the start of this week. This bearish sentiment has also spread to the staking market, with total deposits decreasing by 140,000 units last week, and the validator exit queue exploding from less than 1,000 to over 414,000. However, the fact that Bitmain Emergence Technology additionally deposited 106,200 units, increasing the entry queue by over 600,000, is a somewhat positive aspect.

The derivatives market and technical indicators are warning of a deep bear market. Over the past 24 hours, a total of $149.7 million in forced liquidations occurred, primarily driven by $110.3 million in long position liquidations. On the daily chart, all 20-day, 50-day, and 100-day exponential moving averages, at $2,287, $2,242, and $2,366 respectively, have been breached, solidifying the short-term downtrend. The 14-day Relative Strength Index (RSI) has fallen to 47, and the Stochastic Oscillator has entered the oversold region, suggesting that selling pressure might somewhat slow down despite the downward pressure.

At this point, the most critical primary support level is around $2,211, and if this defense line is breached, it will test a stronger floor at $2,107. If that also collapses, a long and painful fall could continue to $1,909 and $1,741, which were past consolidation zones. Conversely, to break free from the current gloomy bearish bias, the $2,388 resistance level must be decisively broken, and only by surpassing this can the path to an ascent towards $2,746 and $3,411 be reopened.

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