Ethereum’s Stability Hinges On This Factor as Volatility Threatens

Ethereum has successfully held the $2,950 – $3000 range for some time now despite failing to stay above the top. Volatility from the Federal Open Market Committee (FOMC) minutes release today may however cause a drop in the price.

According to analyst Ted Pillows, the potential volatility resulting from the FOMC release could hinder Ethereum’s potential for an upward move unless it breaks above and holds the $3,000 price level. The asset is currently trading at $2,951, which means it failed to meet the requirement.

Will Volatility Swallow Ethereum?

One of the likely outcomes of the FOMC release of its December 10 meeting is that volatility may increase in the crypto market. This will result in a sharp change in price, either negatively or positively. As implied by Pillows, Ethereum’s failure to break above $3,000 by this time means the volatility could cause a further drop.

This also means that the price will likely drop to the $2,700 – $2,800 level where strong support has been found in the past. If this level fails, a further drop to lower levels may kick in. Fortunately, Ethereum has shown strength lately, holding just under $3,000 and not dropping lower to the $2,700 support. 

However, this strength may not hold the asset much longer. Another analyst Mike McGlone has warned that the stagnation in the price is likely to cause a drop in the price, even without additional volatility. Such a drop is engineered by the support getting weaker when momentum slows almost to a standstill.  

This weak momentum has baffled traders as Ethereum’s fundamentals remain strong. Data shows a significant increase in the number of active addresses on the network recently, indicating rising interest from users who are actively transacting.

A Big Week Ahead for Ethereum

Despite the weakness in Ethereum, the network has a lot going for it. On December 29th, it recorded the highest ETF inflow in 24 hours amounting to over $15 million, and this is not an isolated case.

As we enter into the new year, analysts expect a fresh beginning for altcoins including Ethereum, which leaves many possibilities open. Hopefully, the strong fundamentals will translate into price action and set Ethereum on the path of recovery.

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