- According to Fitch, the insurance sector will see a slump after this law comes into effect in September.
- Ethereum price prediction remains bearish below the 3,114 level.
- Forex trading market participants should look for a sell-stop below the $2,950 level.
The ETH/USD closed at $3014.58 after placing a high of $3290.03 and a low of $2993.63. Ethereum extended its loss for the second consecutive session amid the recent negative improvements in the market and the rising strength of the US dollar. The Ethereum price prediction remains bearish below the 3,114 level.
Check out our guide to trade ETH/USD with forex robots.
Fitch Ratings Agency Weight on ETH/USD Pair
On Tuesday, the recent warning issued by one of the top credit rating agencies, Fitch, turned the market mood a little sour. The agency said that the latest Bitcoin law in El Salvador would drastically impact the country’s insurance sector, which earned about 21% of the country’s total capital last year.
According to Fitch Ratings, the latest law was passed by the President of El Salvador, Nayip Bukele, in July and is set to take effect on September 7. This law will negatively impact the insurance sector as well as add systemic risks to the country.
The agency continued and stated that the nation has no experience as it will be the first time making digital assets legal tender. Therefore, the lack of clarity could lead to many risks associated with the cryptocurrency ecosystem. The price volatility and the operational risks could be harmful to the people of El Salvador.
According to Fitch, the insurance sector will see a slump after this law comes into effect in September. That’s because insurance companies will be reluctant to accept payments in bitcoin. They will want their bitcoin holdings to turn into cash ASAP because of the high volatility associated with crypto assets.
On the other hand, the clients will want their policies to be paid in bitcoin. Thus, it could cause a collapse of the whole sector of insurance that has been giving about 21% of the country’s total capital. This warning from Fitch added pressure on the entire cryptocurrency market. Hence, the second-largest cryptocurrency by market cap, Ethereum, suffered and dropped on Tuesday.
Surge in US dollar drags ETH/USD lower to $3,000
The rising prices of the US dollar added further pressure on the declining prices of ETH/USD. The greenback soared amid boosted safe-haven appeal amid the rising uncertainties about geopolitical tensions and the world’s economic recovery.
The increased number of cases of the Delta variant of coronavirus throughout the globe and the sudden collapse of the Afghan government pushed safe-haven appeal higher in the market. It supported the safe-haven greenback, which ultimately had a negative impact on ETH/USD due to their inverse relationship.
On the flip side, a cryptocurrency trader and analyst, Scott Melker, has recently predicted that the price of Ethereum could reach 10,000 per ETH in the upcoming 6-12 months. He also predicted the leading cryptocurrency, Bitcoin, and said that BTC could hit six figures simultaneously. This optimistic prediction should have improved the market sentiment but had little to no impact on the market. Hence, the ETH/USD remains on the back foot on Wednesday.
Ethereum Price Prediction – Daily Technical Levels
Support Resistance
2906.84 3204.10
2801.34 3395.86
2609.58 3501.36
Pivot Point: 3098.60
Ethereum Price Prediction – Daily Technical Analysis: Upward Trendline to Support at 3,112
The Ethereum price prediction remains bearish below the 3,114 level. However, the pair may gain support at the 2,970 level. On the 4-hour chart, the ETH/USD pair is gaining support above the double bottom pattern supporting the ETH at the 2,970 level.
On the bearish side, a breakout below the 2,970 level could extend the selling trend to the 2,900 and 2,747 levels. The ETH/USD pair has already violated the upward channel that supported the pair at the 3,114 level. Now, the same support level is working as support for the pair.
The 50-day exponential moving average (red line) remains at 3,240, suggesting a selling trend in the ETH/USD pair. On the other hand, the Stochastic RSI, the most important indicator, is in the selling zone.
The Forex trading market participants should look for a sell-stop below the $2,950 level. The initial target remains at $2,860 and $2,740. Alternatively, traders can place a buy stop at the $3,110 level. All the best.
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