Ethereum’s fate in the hands of the Fed this Q1 – How?
Tracking ETH price action and its recovery odds? Here are key factors to consider...
- The upcoming Fed meeting could determine ETH’s next move.
- Amberdata projects ETH could sharply rise if Elon Musk uses it to track U.S. government expenditure.
Ethereum [ETH] remains in a challenging position despite the overall positive performance during past Q1s. The altcoin has reversed nearly half of its ‘Trump pump’ gains and was down 4% in January.
However, according to crypto analyst Benjamin Cowen, the upcoming Fed rate decision and guidance could set the next trend for ETH. Part of Cowen’s analysis on X read,
“One risk for #ETH is if the Fed comes out this week and says no QE, maybe that would cause ETH to finally go home on its USD pair, leading the Fed to reverse course in March 2025 causing a quick recovery.”
For context, QE (quantitative easing) is a period of increased money supply and dollar liquidity by the Federate Reserve.
By extension, QE fuels risk-on assets, including crypto. Despite the ongoing interest rate cut since last September, there hasn’t been a pivot to QE yet.
Ethereum: Will Q1 historical gains repeat?
That said, Q1 has always been the best for ETH performance, with +80% gains on average.
From a monthly perspective, January and March have historically seen substantial gains, with an average of 20% and 22%.
However, the January 2025 period could be closed in red. Since 2016, the altcoin has seen only one red February and two dismal records in March.
If history rhymes, this could shift bullish expectations to next month or March.
However, the Options analytics platform Amberdata underscored risk for the altcoin, stating that traders were only pricing a 15% chance of ETH topping $5K by June.
It added that the price could trigger a sharp upside reversal if the U.S. government uses it to track government expenditures. Part of Amberdata’s weekly report read,
“Elon is looking to incorporate Blockchain into DOGE (Maybe DOGE coin, but maybe ETH L1 or L2… Maybe SOL?). It’s all hard to tell. I wouldn’t completely discount an Ethereum wildcard appearing…A right-tail announcement would send ETH soaring higher, very fast.”
Simply put, there were two possible bullish catalysts for ETH in the near term, and they are worth tracking in case they are validated.
Additionally, Cowen noted that the ETH/BTC ratio could bottom in case of a QE pivot. Apart from brief rallies in last November and January, the pair has dropped lower to 0.03.
The indicator tracks ETH’s relative price performance to BTC.
The pair’s advance above the moving average could signal ETH’s strengthening, but such a rebound remains to be seen. In the meantime, ETH was valued at $3.2K.
