Ethereum has lost bullish momentum over the weekend and hints at a pullback in the short term. The cryptocurrency is still leading the current crypto market recovery with a 14% profit over the past week but might be negatively impacted by macroeconomic factors.
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At the time of writing, Ethereum (ETH) trades at $1,530 with a 5% loss in the last 24 hours.
ETH’s price moving sideways on the 4-hour chart. Source: ETHUSDT Tradingview
According to a senior analyst at research firm Messari, the second cryptocurrency by market capitalization will face several challenges this week. As NewsBTC reported, Ethereum was at the heart of the current market relief rally.
ETH core developers set a date for “The Merge”, the event that will complete its transition to a Proof-of-Stake (PoS) consensus. The highly anticipated event will take place in September this year, but the announcement might be insufficient to mitigate current macro conditions.
The Messari analyst believes this week will be key in shedding light on ETH’s price future price action. Since last week, major corporations in the United States have been publishing their earnings reports.
So far, big tech companies have been showing relatively good results. In the next few days, Apple, Meta, Google, Exxon, Ford, Amazon, Intel, and other behemoths will release their earnings.
If the results are favorable, Ethereum and the crypto market might continue rallying beyond critical resistance. The opposite will be true if these companies failed to meet market expectations. The analyst said the following while sharing the image below showing ETH and BTC’s correlation with the S&P 500:
Eth correlation with stocks is rolling over. If we have big misses on earnings, a bad reaction to the fed and stocks rolling out this week will be THE test is the merge > macro.
Source: Dunleavy via Twitter
As the chart shows, ETH’s price has been decoupling from the traditional market, specifically the S&P 500 since the start of July 2022. Most likely as a reaction to “The Merge” announcement, this trend could reverse on the back of a bad earnings season.
What Lies Ahead For Ethereum
On the other hand, if companies record losses, the S&P 500 and other Indexes could trend lower and finally hint at a potential macro bottom for the multi-month bearish trend across global financial markets.
The analyst noted that only 21% of the companies in the S&P 500 have reported their earnings. This leaves a majority of this Index to determine the upcoming trend in legacy markets and the crypto markets. The analyst added:
If big tech misses and guides lower we finally could see the mark down in stocks to reflect the forward p/e folks have been waiting for. Earnings est are still historically high for any period, forget one with a war, record high infl, a pandemic etc.
Source: Dunleavy via Twitter
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If Ethereum can go through the next week unscathed by the turbulence in equities, the bullish momentum could extend. $1,700 is still a major resistance point to measure bull conviction, if these investors can push ETH beyond this point, the cryptocurrency could be set to reclaim much higher levels.