Ethereum (ETH) Price Hits $2,000 as BTC Reclaims $100K

The Federal Reserve decided not to change interest rates on May 7, keeping them at 4.25% to 4.50%. This made crypto assets more appealing to investors.

The Federal Reserve's decision to keep interest rates unchanged at 4.25% to 4.50% on May 7 has sparked a rally in crypto assets, as investors appear to be less interested in traditional markets and are seeking refuge in digital assets.

As a result, Bitcoin has surged to reach the $100,000 mark once again, while Ethereum continues to rise despite a recent setback linked to heightened tensions between the U.S. and China that led to the liquidation of over $175 million in positions. Of that amount, buyers closed $27 million in positions, whereas sellers experienced $148 million in forced liquidations.

The increase in Ethereum's price also led to an 18% surge in open interest, which is now at $24.8 billion.

With the Pectra upgrade having launched on May 7 and large investors steadily pouring money into Ether-based ETFs for two consecutive weeks, according to CoinShares' latest report, interest in the second-largest cryptocurrency is heating up.

However, this buying demand might not last for long as the MVRV ratio has dropped to 0.888, which is an indicator used to measure the average price at which an asset is sold by market participants.

According to IntoTheBlock, when the ratio falls below 1, it signifies that many investors are selling at a loss, even though the asset's price is increasing. This behavior, known as panic selling, could ultimately encourage further selling and contribute to a downturn in the market.

Still, some major players, or "smart money," are buying. For instance, Wintermute made large purchases in the last 24 hours, likely to benefit from the rally and collect market-making fees.

Also, Abraxas Capital withdrew more than 41,000 ETH (worth $75M) from Binance and Kraken, according to Lookonchain.

Despite the recent price surge, it's worth noting that nearly half of all Ethereum wallets, approximately 65.5 million, are still holding at a loss.

As the RSI trades within the overbought region at level 78, ETH price is poised for a short-term downward correction. Sellers are having a hard time pushing Ether below its moving averages, which suggests that there isn't much pressure to sell during the upward rally. Buyers are also holding the price around immediate resistance line.

As of writing, ETH price trades at $2,048, surging over 13% in the last 24 hours.

Buyers may use this as a chance to break through the resistance at $2,109. If they succeed, the ETH/USDT pair could gain momentum and head above the $2,500 level. There's a smaller hurdle at the immediate 23.6% Fib level, but it's expected to be overcome.

On the flip side, sellers will likely try to drag the price below the moving averages. If that happens, ETH could drop to $1,734. Buyers will probably step in there, but if they can't hold that level, the price might fall further to key support at $1,542.