Ethereum (ETH) prices remain firmly above $3,800 despite investors’ lukewarm reaction to upcoming U.S. nonfarm payrolls data, while on-chain data analysis shows a rare bullish signal that could spark the next rally.
Ethereum Price Cools Ahead of U.S. Inflation and Employment Data
The U.S. Bureau of Labor Statistics is scheduled to release its monthly nonfarm payrolls data on Friday, May 31. Nonfarm payrolls are an important macroeconomic indicator that influences regulators and investors' views on the direction of inflation and overall economic activity.
In the current scenario, another decline in non-farm payrolls could push the Fed to cut interest rates, and vice versa.
Strategic cryptocurrency investors have reduced trading activity as the report approaches, causing Ethereum markets to enter a consolidation phase over the past 24 hours, interrupting a week-long uptrend since the Ethereum ETF approval.
Ethereum Price Action
As shown in the above chart, between May 21 and May 29, the price of Ethereum quickly rose by 30% to reach a monthly high of $3,974. But between May 29 and May 31, the Ethereum price retraced 7% to reach a weekly low of $3,698.
This suggests that Ethereum’s post-ETF price rally appears to have entered a plateau as cryptocurrency investors take a more conservative stance ahead of the upcoming release of U.S. macroeconomic index data.
However, a closer look at on-chain data shows that institutional investors on the Ethereum network are still making large transactions behind the scenes.
As shown in the figure below, IntoTheBlock’s average transaction size provides a glimpse into the speed at which investors are making large investments on the blockchain network.
As shown in the chart above, as of May 19, the average transaction size on Ethereum was 1.03 ETH. However, this number has continued to increase significantly since the Ethereum ETF was approved.
As of the time of writing on May 31, the average Ethereum transaction size has reached 2.46 ETH, reflecting a 240% increase in the past two weeks.
Typically, a 240% increase in average transaction size is a key bullish signal for several reasons. First, it indicates an improvement in sentiment and bullish confidence as investors are now willing to trade at higher values.
Additionally, these higher value transactions also indicate a significant increase in market liquidity, which new potential participants may find attractive.
Ethereum (ETH) Price Prediction: Is $4,500 Target Possible?
At the time of writing on May 31, Ethereum price was struggling to defend the $3,800 support level. However, if the U.S. non-farm payrolls data triggers a positive market reaction, a 240% increase in trading volume could set the stage for Ethereum prices to break through $4,500 by June 2024.
However, judging by the historical buying trends, the Ethereum price may encounter important resistance at $4,200 in the next rally phase.
As shown in the above chart, 7,430,000 active ETH holders purchased 3,060,000 ETH at an average price of $4,213. If they choose to take profits early, Ethereum price may find it difficult to break through this resistance zone.
But if Ethereum price can decisively break above $4,200, bulls can expect to create new highs above $4,500.
On the downside, if Ethereum fails to defend the $3,700 support, it could drop to $3,560.
Disclaimer: This content is for informational purposes only and should not be considered financial advice. The opinions expressed in this article may contain the personal opinions of the author and do not necessarily reflect the views of The Crypto Basic. Readers are encouraged to perform thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
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