Yerevan — Ethereum prices lowered on Monday, shaking off most of the gains it had secured during the weekend session as it tailed trends in the Bitcoin market.
The second-most valuable cryptocurrency was down 3.28 percent to $1,788.28 per token ahead of the New York closing bell. Its price decline came as a part of a broader corrective trend that began after it rallied to a new monthly high of $1,944. Traders used the local peak to secure profits, leading to a drop in bids for the benchmark ETH/USD instrument.
Nevertheless, the pair’s sell-off accelerated during the European session Monday after Bitcoin, the world’s leading cryptocurrency by market cap, underwent a sharp decline. So it appears, traders started dumping BTC/USD on fears over a $1 billion BTC transfer to US exchange Gemini’s wallet. The pair briefly fell below $55,000 before rebounding higher.
Ethereum did the same stunt. Its prices almost tailed Bitcoin, forming an intraday low of $1,734.87 before retracing higher. The cryptocurrency’s synched performance with its top contender again showed its growing positive correlation with it. According to Crypto Watch, the correlation efficiency between Bitcoin and Ethereum is 0.84.
Fed Meeting Ahead
Bitcoin analysts are waiting for the Federal Open Market Committee’s meeting on Tuesday and Wednesday to decide their bias on the market, primarily after a recent sharp retreat in the Treasury markets.
In retrospect, Bitcoin experienced a 21 percent drop in the week ending February 28 as the yield on the US 10-year Treasury note rose dramatically higher. Nevertheless, the benchmark cryptocurrency retraced as the interest rate returns subsided after hitting its 12-month high of 1.629 percent.
Ethereum maintained its correlation with Bitcoin—and surged to a new record high of $2,041.42 on February 21. Therefore, its likelihood of mirroring the top cryptocurrency’s moves after the next Fed meeting became higher due.
The US central bank will decide where the bond yields and risk trade for day ahead. A general consensus believe that chairman Jerome Powell would maintain the lending rates near zero while continuing their $120 billion monthly asset purchase program. That could prompt investors to stay exposed to riskier assets such as tech stocks and bitcoin.
Meanwhile, with President Joe Biden’s $1.9 trillion stimulus package, which included up to $1,400 worth of direct payments to eligible Americans, analysts think beneficiaries would use a portion of that money to buy stocks and cryptocurrencies.
“A lot of the stimulus checks are going to young people who want to buy bitcoin,” said Mike Novogratz, the CEO of Galaxy Digital. “What happens on the weekend is retail gets excited you can tell because the cost of leverage goes way up on the weekend.”
That puts Ethereum en route to testing levels above $2,000—an all-time high, most likely.