Why is Ether (ETH) price up today?

Ethereum’s native token, Ether , opened strongly in the new weekly session, signaling a risk-on mood after Donald Trump’s major crypto endorsement at the Bitcoin 2024 conference in Nashville and ahead of the Federal Reserve meeting.

Trump’s pro-crypto speech drives ETH price higher

Ether’s price rose by 3.5% to approach $3,400 on July 29, two days after Trump’s keynote to the United States’s Bitcoin community.

Trump proposed the establishment of a national strategic Bitcoin reserve, where the US government would keep 100% of the BTC it currently holds or acquires in the future. Later, Republican Senator Cynthia Lummis of Wyoming announced a bill that aims for the US Treasury to acquire 1 million BTC over five years.

Trump’s pro-crypto policies and the potential for a more favorable regulatory environment in the U.S. have boosted the prospects for broader crypto adoption. Following his speech, Hong Kong Legislative Council Member Johnny Ng announced plans to explore incorporating Bitcoin into the region’s financial reserves.

These optimistic fundamentals drove Bitcoin and the rest of the crypto market higher on July 27. When major cryptocurrencies like Bitcoin receive positive news, it often lifts the entire market, including Ether.

Ethereum rises on improving rate cut bets

Ether’s price rise today comes ahead of the Federal Reserve’s policy announcement and Chair Jerome Powell’s remarks on July 31 for signs supporting a potential interest-rate cut in September.

With the Fed’s benchmark rate currently at 5.25% to 5.5%, policymakers have recently highlighted a balanced labor market and declining inflation, suggesting a case for lower borrowing costs. Several experts, including former New York Fed President William Dudley and economist Mohamed El-Erian, argue for more aggressive rate cuts, warning of potential policy missteps if rates remain too high.

The target rate probabilities for a September rate cut has improved to 87.7% from 57.9% a month ago.

In turn, the yields on short-dated and long-dated US Treasury notes have declined in recent weeks, making investing in non-yielding, “riskier” assets like Bitcoin and Ether more attractive.

ETH funding rates reach June highs

Today’s Ether price gains coincide with Ethereum futures’ funding rates rising to the levels last seen in June.

As of July 29, the Ether funding rates reached 0.26% per week after jumping from its month-to-date low of 0.014% per week. Meanwhile, the open interest has declined to $13.97 billion on July 29, down from the monthly peak of $15.22 billion. 

A falling OI and rising funding rate together generally suggest short covering. In other words, bearish positions are being closed, and traders’ bullish sentiment is increasing as evidenced by long traders paying short traders to keep their positions open (thus higher funding rates).

This combination can often precede a bullish price movement.

Ether bounces from key MA trendline

Looking at the charts, Ether’s price gains are part of a rebound that started at a support confluence comprising a 200-day exponential moving average (200-day EMA; the blue wave), a 0.236 Fibonacci retracement line, and the lower trendline of its prevailing descending channel pattern.

ETH price is now approaching the channel’s upper trendline at around $3,460, coinciding with the 0.5 Fib retracement line. A decisive breakout above the channel will likely boost the price toward the next Fib line at around $3,600.

Related: Ethereum ETF launch drives $2.2B inflows: CoinShares

Conversely, a retreat from the upper trendline risks returning the price toward the 200-day EMA.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.