Ethereum lost its bullish momentum over the weekend and is hinting at a short-term pullback. Cryptocurrency continues to lead the current recovery of the cryptocurrency market with 14% gains over the past week, but it may be negatively affected by macroeconomic factors.
Related reading | Bitcoin Bulls Try to Recover as BTC Displaces From $22,000 Level
At the time of writing, Ethereum (ETH) is trading at $1,530 with a 5% loss in the last 24 hours.
According to a senior analyst at research firm Messari, the second cryptocurrency by market capitalization will face many challenges this week. As reported by NewsBTC, Ethereum has been at the center of the current relief rally in the market.
The core ETH developers have set a date for a “consolidation,” an event that will complete its transition to Proof of Stake (PoS) consensus. The highly anticipated event will take place in September of this year, but the announcement may be insufficient to mitigate the current macro conditions.
The Messari analyst believes that this week will be a major factor in highlighting the future price action of ETH. Since last week, major US companies have been publishing their earnings reports.
So far, the big tech companies have shown relatively good results. In the next few days, Apple, Meta, Google, Exxon, Ford, Amazon, Intel and other giants will release their dividends.
If the results are favorable, the Ethereum and crypto markets may continue to rally after critical resistance. The opposite will be true if these companies fail to meet market expectations. analyst He said The following while sharing the image below to show the correlation of ETH and BTC to the S&P 500 Index:
The ethical relationship with rolling stock. If we have major earnings failures, the bad reaction to the Fed and the stocks to be rolled out this week will be the merger > macro.
As the chart shows, the price of ETH has been decoupled from the traditional market, specifically the S&P 500 index, since the beginning of July 2022. Most likely as a reaction to the “merger” announcement, this trend could reverse on the back of a bad earnings season.
What lies ahead for Ethereum
On the other hand, if companies post losses, the S&P 500 and other indices could head lower and finally hint at a potential macro bottom for the multi-month downtrend across global financial markets.
The analyst noted that only 21% of companies in the S&P 500 reported earnings. This leaves the majority of this indicator to determine the upcoming trend in the legacy and cryptocurrency markets. analyst added:
If big tech gets it wrong and guides are low, we can finally see the mark going down in stocks to reflect the profit/loss ratio that advanced folks have been waiting for. Earnings estimates are still historically high for any period, forget one at war, record high inflation, pandemic etc.
Related reading | Over 57,000 traders liquidated as Bitcoin drops below $22,000
If Ethereum can continue into the next week without being affected by the turmoil in stocks, the upward momentum may extend. $1700 is still a major resistance point to gauge bullish conviction, if these investors can push ETH beyond this point, the cryptocurrency could be set to recover much higher levels.