Ethereum price reclaims the $2000 level

Ethereum price reclaimed the $2000 level on Wednesday, with the broader financial markets readjusting ahead of a Fed interest rate decision.

Ethereum price reclaimed the $2,000 level on Wednesday, with the broader financial markets readjusting ahead of a Fed interest rate decision. The crypto coin traded at $2,033 by 08:00 ET (12:00 GMT), and rose by 5.2%, recording its largest single-day gain in seventeen days.

The first-quarter interest rate decision from the Federal Reserve is due on Wednesday at 14:00 ET. The bank is widely expected to hike rates by 25 basis points, and keep the door open to more increases throughout the year.

Markets will also be assessing the Fed’s dot plot, which predicts individual officials' terminal rate expectations for 2025. Rising expectations for hikes could exert further upward pressure on the dollar and Treasury yields, potentially announcing an early exit from the recent market rally.

At the same time, consumer price index data for April is also due on Wednesday. Economists polled by Dow Jones anticipate a slight rise in the headline inflation rate to 0.3%, while the core CPI, which excludes volatile food and energy prices, is expected to remain unchanged at 0.2%.

A strong reading could support the narrative of a sticky inflation regime, which may keep the Fed on a path of gradual interest rates increases. This, in turn, could favor the dollar and weigh on riskier assets such as stocks and cryptocurrencies.

While Bitcoin price slid below the $70,000 level once again, Ethereum price rose to its highest level since early February. The crypto coin has struggled in the spot ETF market, and is now on a ten-session losing streak.

A return to the upside will likely trigger increased investor appetite, and could help Ethereum price stay on the upside.

Ethereum open interest also rose sharply by 10.4% above its level 24 hours earlier. That affirms a strong investor inclination towards ETH, which will likely create a support for the coin’s upside trajectory. However, its DeFi performance is still lagging behind, and that could limit the upside. According to DeFiLlama, Ethereum chain’s Total Value Locked (TVL) was down by 3.7% in the 24 hours leading to this writing.