ETH is still up nearly 4.0% this week despite having dropped off close to 2% from Wednesday's highs in the $1,270 area.
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ETH, the native cryptocurrency that drives the smart contract-enabled decentralized Ethereum blockchain, is hovering near $1,250 on Thursday after making significant gains in the first two days of the week. ETH is still up nearly 4.0% this week despite having dropped off close to 2% from Wednesday's highs in the $1,270 area, managing a straight upside break of both of its 21- and 50-Day Moving Averages on Wednesday.
Short-term price forecasts have been optimistic in the aftermath of the recent uptrend, which seems to have been more technically oriented in the lack of any significant Ethereum-specific triggers. The US labor market indicators (so far) have been positive, but macro headwinds could pose a challenge for the bulls given that Fed officials have made hawkish comments in speeches and during the release of meeting minutes on Wednesday.
Where will ETH prices go next?
So perhaps Fed tightening bets could send ETH back towards where it started the week, at $1,200. However, given the strong technical picture, a retake of these levels could spark significant buying interest. ETH bulls are eyeing a potential challenge of the 200DMA at $1,390 along with an eventual test of the December highs in the $1,340 level after breaking out of a medium-term downtrend earlier this week.
The concern is whether ETH can progress beyond these levels. Since July 2022, the cryptocurrency has been trapped behind a negative trend channel. And continued challenges to the wider crypto sector from a still very hawkish Fed and a declining US economy suggest that a big break higher in the following weeks or months might not be possible.
How far can ETH go in 2023?
Despite this, many predict a calming of macro headwinds later this year. According to many economists, US inflation will continue to fall quickly back toward the Fed's 2.0% level, which should end up giving the US central bank flexibility to start reducing interest rates to boost development, which is also expected to decline significantly. This could cause a widespread pumping of risky assets. ETH bulls will remain optimistic that the world's second-largest cryptocurrency by market capitalization can recover its pre-"merge" highs in the $2000 level from last August.
Ethereum advancements to boost ETH?
The Ethereum blockchain protocol will be experiencing several significant changes/upgrades that will increase investor interest, in addition to any potential macro tailwinds that could support Ethereum this year. The 'Shanghai' hard fork, set for March, will be the first significant upgrade.
This hard fork will primarily assist ETH network validators by allowing them to finally withdraw the ETH they have staked to protect the network. According to analysts, by allowing staked ETH withdrawals, more investors will be drawn to ETH staking, which usually yields between 4 and 5%. Some believe that this could massively increase cryptocurrency demand.
The "sharding" process, in which the Ethereum network is divided into numerous parallel blockchains (shards), will help Ethereum developers advance their goal of making the Ethereum blockchain more scalable and enable it to process more data and transactions. A sharding upgrade is currently planned for the fall by the developers.
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