Quick overview

Live ETH/USD Chart

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Ethereum continued to decline by 5% on Tuesday, breaking below the $4,200 level after short-term volatility, institutional outflows, and validator queue exits increased. Ahead of Federal Reserve (Fed) Chair Jerome Powell’s speech at the Jackson Hole Economic Symposium on Friday, traders are continuing to de-risk, as shown by the cautious sentiment.

Ethereum fell below $4,200, bringing its total decline since last Thursday’s market-shaking release of the US Producer Price Index (PPI) inflation data for July to over 10%. According to CryptoQuant’s data, Ethereum experienced lengthy liquidations totaling more than $1.11 billion during this period, indicating de-risking ahead of Powell’s speech.

After a significant reversal from its upward trend, Ethereum is currently testing the $4,100 support level, falling below the 14-day Exponential Moving Average (EMA). If ETH drops below $4,100, it may find support at the 78.6% Fibonacci Retracement level near $4,000, which is just above a key descending trendline.

Additionally, the CME FedWatch Tool indicates that market expectations for a rate cut at the next Federal Open Market Committee (FOMC) meeting in September have decreased from over 90 percent to 82 percent on Tuesday, following last week’s higher-than-expected inflation data.

This decline suggests that cautious sentiment is gradually taking hold, despite investors still favoring a rate cut.

Data from Validatorqueue.com shows Ethereum’s validator exit queue has risen to a record high of 927,000 ETH, reflecting similar on-chain sentiment. The validator exit queue represents the number of coins waiting to be released from validation duties. Large exits during a price correction often negatively impact market sentiment, even if some of these coins are not destined for profit-taking..