When the US Federal Reserve last hiked interest rates in May 2023, Ethereum prices spiked 10%. Now with another rate hike announced on July 26th, could Ethereum see a similar price boost?
Historical data shows sizable ETH gains after the past two rate hikes in March and May this year. Moreover, on-chain activity hints Ethereum investors made some bullish moves anticipating this latest hike.
According to Santiment, ETH exchange supply hit a 5-year low in mid-July as trading dried up and prices stagnated around $1,850-$1,890. However, exchange reserves increased by 40,000 ETH from July 22nd to 27th heading into the rate decision, signaling a potential uptick in market participation.
When exchange supply rises after hitting historic lows, it often precedes increased transaction activity. This modest build-up in Ethereum exchange balances ahead of the Fed announcement may indicate investors are preparing for more trading activity that could positively impact ETH prices in the near term.
Moreover, Ethereum has seen spikes in transaction volumes this week, confirming the Fed rate hike may positively influence network activity.
On July 22nd, 1.14 million ETH were transferred to Ethereum. But by July 27th, daily transaction volume had gradually increased 65% to 1.88 million ETH.
Transaction volume measures the total tokens moved across the network daily. Rising volume indicates growing economic activity.
Given this surge in ETH transactions have aligned with the rate hike timing, it could signal another Ethereum price increase is imminent.
The combination of accumulating exchange supply and accelerating on-chain transfers suggests investors are anticipating amplified trading and engagement post-rate hikes. This points to potential ETH price gains following the latest Fed decision, mirroring dynamics from previous hikes.
If historical patterns repeat, Ethereum could see a 5-10% price surge following the latest Fed rate hike, potentially retesting the $2,000 level.
However, the initial resistance at $1,900 will be key to watch where 9 million wallets holding 36 million ETH had bought at minimum prices of $1,910. Some selling could emerge as they exit break-even positions.
But if bullish momentum accelerates post-rate hike as expected, Ethereum could promptly reclaim $2,000 again.
Bears could negate the bullish outlook if ETH drops below $1,800. Yet the $1,850 support appears solid currently. Here, 4 million wallets holding 5 million ETH had been purchased at an average of $1,857 and could offer bullish support to avoid losses.
Still, failing to hold that support could see Ethereum fall toward $1,750. In summary, historical patterns suggest ETH could rally 5-10% toward $2,000 after the Fed hike, but key support levels need to hold.
