ETH at Risk Amid SEC Scrutiny and Bearish Stakes

The Saturday Overview

On Saturday, Ethereum (ETH) declined by 0.42%. Following a 0.36% fall on Friday, ETH ended the session at $1,647. The Saturday retreat left ETH at sub-$1,650 for the first time in four sessions.

Bearish Sentiment Lingers as SEC and Lawmakers Drag Their Feet

Sentiment toward the ongoing SEC cases against Coinbase and Ripple weighed on buyer appetite. While neither case directly involves ETH, the SEC classification of ETH as a security leaves ETH sensitive to case-related chatter and Court activity.

Earlier this year, SEC Chair Gary Gensler included ETH in the SEC basket of crypto securities. For investors hoping for the launch of ETH-Spot ETFs, the classification of ETH as a security could complicate matters.

The SEC approval of  ETH-Futures ETFs would take ETH one step closer to the spot market. However, investors should consider the delays to the launch of BTC-Spot ETFs.

US lawmakers could expedite the process by rolling out a US crypto regulatory framework that protects investors and drives innovation. However, investors may need to wait until a Republican victory in the US Presidential Election to witness an end to the anti-crypto rhetoric on Capitol Hill.

Staking Statistics Turn Bearish

On Saturday, staking inflows fell back to sub-30,000. According to CryptoQuant, staking inflows fell from 57,376 on Friday to 26,464 on Saturday. However, the fall aligned with weekend inflow levels that tend to be on the lower side.

(Values are in ETH unless otherwise stated.)

From overnight, the withdrawal profile was bearish. Principal withdrawals spiked before easing back to normal levels. Withdrawal projections for the morning session are less bearish. Projections show principal withdrawals will sit at above-normal levels this morning. However, there are no expectations of a spike.

Ethereum Price Action

Daily Chart

The Daily Chart showed ETH sitting at the lower level of the $1,670 – $1,650 support band. ETH fell back from the 50-day and 200-day EMAs, sending bearish near and longer-term price signals.

Looking at the 14-Daily RSI, 29.92 showed ETH in oversold territory. The RSI aligns with the EMAs, signaling a return to sub-$1,600. A bearish cross of the 50-day EMA through the 200-day EMA would signal an extended sell-off. However, a move through the $1,670 – $1,650 support band would give the bulls a run at the EMAs and the $1,795 – $1,815 resistance band.

4-Hourly Chart

Looking at the 4-Hourly Chart, the ETH/USD faces strong resistance at $1,650. ETH sits above the lower level of the $1,670 – $1,650 support band. Significantly, ETH hovers below 50-day and 200-day EMAs, reaffirming bearish near and longer-term price signals.

The 14-4H RSI reading of 48.67 reflects a bearish sentiment, with selling pressure outweighing buying pressure. Notably, the RSI and EMAs signal a fall through the lower level of the $1,670 – $1,650 support band to target sub-$1,600.