Ethereum’s bullish momentum has waned over the weekend. This suggests that Ethereum might be on the verge of a pullback. The crypto-currency is leading the recovery of the cryptocurrency market with 14% profit in the last week, but could be adversely affected by macroeconomic factors.
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Ethereum (ETH), currently trading at $1530, has suffered a 5% decline in the past 24 hours.
A senior analyst from research company Messari said that the second cryptocurrency in terms of market capitalization would face many challenges this week. NewsBTC stated that Ethereum was the core of the current market relief rally.
ETH core developers set a date for “The Merge”, the event that will complete its transition to a Proof-of-Stake (PoS) consensus. Although the highly-anticipated event is scheduled for September, it may not be enough to address current macro conditions.
The Messari analyst believes this week will be key in shedding light on ETH’s price future price action. Major corporations from the United States published their earnings reports last week.
Big tech companies are showing good results so far. Apple, Meta and Google will soon release earnings.
Ethereum and the cryptocurrency market may continue to rise if the results prove favorable. If the companies do not meet expectations of market participants, it will result in the reverse. An analyst said the following while sharing the image below showing ETH and BTC’s correlation with the S&P 500:
Stocks and Eth correlate well. If we have big misses on earnings, a bad reaction to the fed and stocks rolling out this week will be THE test is the merge > macro.
As the chart shows, ETH’s price has been decoupling from the traditional market, specifically the S&P 500 since the start of July 2022. Most likely as a reaction to “The Merge” announcement, this trend could reverse on the back of a bad earnings season.
Ethereum’s Future
On the other hand, if companies record losses, the S&P 500 and other Indexes could trend lower and finally hint at a potential macro bottom for the multi-month bearish trend across global financial markets.
The analyst noted that only 21% of the companies in the S&P 500 have reported their earnings. The majority of the Index is left to forecast the future trend in crypto and legacy markets. An analyst added:
Big tech could misses or guides lower, and stocks would be marked down to reflect forward p/e people have been waiting. The historical earnings est for any period are high, even if there is a war or record-high infl, pandemic, etc.
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The bullish momentum may continue if Ethereum is able to weather the volatility in equity markets for the week. The $1,700 resistance level is still a significant point of measure for bull conviction. If these investors push ETH past this point, the cryptocurrency may be able to regain much higher levels.