As of October 15, 2023, eth to usd has fallen by a combined 8.2% for the month (from $1,720 to $1,580), with an amplitude of 14.5% and a volatility (30-day standard deviation) of 2.8%, higher than Bitcoin’s 1.6%. The main reasons for the strange price action are the rising hopes for the Federal Reserve interest rate hike (the probability of the rate hike in November grew from 28% to 42%) and the postponement of the SEC vote on the Ethereum futures ETF to December. Technical analysis shows that the 4-hour MACD is in bearish crossover below the zero line and the daily RSI of ETH is 39 (oversold level). It can go down to $1,480 (61.8% Fibonacci retracement level) if it breaks below $1,550 (50-day moving average). Conversely, if it breaks above $1,650 (upper Bollinger Bands), Short liquidation will be 280 million US dollars (CoinGlass data).
On-chain data shows capital outflows. The “whale” address containing over 10,000 ETH has net moved 240,000 ETH (approximately 380 million US dollars) to the exchange in the past 7 days, a new weekly record for 2023 (Santiment). At the same time, the proportion of ETH reserves held on the exchange grew to 18.3% (the year’s high) and the staking volume fell to 26 million (21.5% of the total circulating volume), signifying the rise in short-run selling pressure. In the derivatives market, Deribit’s ETH options’ implied volatility rose to 68% (over the 30-day average of 52%), and the proportion of outstanding put options with an exercise price of $1,500 reached 31%, indicating that the market is betting on another decline.
Regulatory risks weigh on the rebound. In the SEC’s case against Coinbase, Ethereum was actually referred to as an “unregistered security.”. If the view is confirmed at the hearing on the 2nd of November, eth to usd could go as low as $1,200 (jpmorgan Chase model). Conversely, the positive impact is the application for BlackRock Ethereum Spot ETF (with a 35% chance), which, if approved, could give a monthly net inflow of 1.5 billion US dollars (for a grayscale calculation). Also, the Ethereum core developers guaranteed that the “Dencun Upgrade” will be done in January 2024 and that the Layer2 Gas fee may reduce by 90%. This is a long-term benefit but has short-term limited impacts.
At the macroeconomic level, the 10-year US Treasury bond yield increased to 4.8% (the highest since 2007), which weighed on the valuation of risky assets. Historical statistics indicate that when the yield is more than 4.5%, the median 30-day yield of ETH is -7% (statistics from 2018-2023). But if the Federal Reserve sends dovish signals (with a 20% chance), eth to usd can recover to the level of 1,700-1,800 (predicted by Bloomberg analysts).
Operation strategy:
Short-term bearish: Short sell at $1,480 if the price drops below $1,550 and set a stop-loss at $1,600 (risk-reward ratio 1:2).
Event-driven: Reduce positions to 50% before the November hearing and keep cash to exploit volatility.
Regular investment hedging: Invest $500 every month and purchase a $1,400 put option (premium around 5%) to lock down downside risks.
This month, eth to usd will range from $1,480 to $1,700. The breakthrough direction is pending regulatory progress and macro policies. Be cautious against exchange liquidity risks – In May 2023, Binance suspended ETH withdrawals because of extreme market conditions, causing the instantaneous spread to widen to 3%.