Ethereum gets jittery ahead of CLARITY Act vote and Fed decision. What to watch next?

<p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;">FUNDAMENTAL OVERVIEW</p><p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;"> </p><p>Ethereum has been remarkably resilient over the past week, considering the increasingly negative macro backdrop for risk assets. The <a href="https://investinglive.com/news/us-august-cpi-vs-3-4-expected/" rel="follow" style="color: rgba(70, 120, 134, 1); text-decoration: underline;">higher than expected US monthly core inflation</a> data has sealed a Fed rate hike on Wednesday, while oil prices above $100 are <a href="https://investinglive.com/education/how-oil-prices-influence-inflation-inflation-expectations-and-monetary-policy/" rel="follow" style="color: rgba(70, 120, 134, 1); text-decoration: underline;">adding inflationary pressure</a> and reinforcing expectations for tighter monetary policy.</p><p>Despite these headwinds, Ethereum has managed to hold relatively firm. This suggests that crypto-specific developments might have been providing short-term support to offset the negative macro pressure. The main driver might have been growing optimism for the cloture vote on the CLARITY Act. </p><p>The legislation seeks to provide the US crypto industry with a more defined regulatory framework, including a clearer division of responsibilities between the SEC and CFTC. It would also introduce regulatory requirements for crypto exchanges, brokers and dealers.</p><p>Greater regulatory clarity would be positive for the crypto market. Clearer rules would reduce uncertainty for exchanges and traditional financial institutions, while potentially making it easier for asset managers and other financial firms to develop and offer crypto-related products. If successful, the legislation could pave the way for greater institutional participation, deeper market liquidity and additional capital entering the crypto market.</p><p>The immediate catalyst comes <a href="https://investinglive.com/cryptocurrency/crypto-democrats-meet-ahead-of-tuesday-s-crucial-clarity-act-vote-btc-eth-implications/" rel="follow" style="color: rgba(70, 120, 134, 1); text-decoration: underline;">today at 2:15pm ET, when the Clarity Act faces its first major Senate hurdle in the form of a cloture vote</a>. The vote requires 60 senators to support opening debate on the legislation.</p><p>A failed vote could close the legislative window for crypto market structure this year, given the November midterms. This outcome would likely be negative for Ethereum and could trigger a selloff. But even a successful vote may not be positive. With the FOMC decision coming tomorrow, I think Ethereum could experience a classic "sell the fact" reaction as traders shift their attention from the Clarity Act back to monetary policy and the macro picture.</p><p> </p><p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;">ETHEREUM TECHNICAL ANALYSIS – DAILY TIMEFRAME</p><p></p><p>On the daily chart, we can see that <a href="https://www.tradingview.com/symbols/ETHUSD/" rel="follow" style="color: rgba(70, 120, 134, 1); text-decoration: underline;">Ethereum</a> probed above the 2,560 resistance two times but failed to sustain the breakout. This might be a bearish signal if we also consider the macro backdrop. If the price drops back to the 2,360 support, we can expect the buyers to step in there with a defined risk below the support to keep targeting a rally into the 3,000 level. The sellers, on the other hand, will want to see the price breaking below the support to increase the bearish bets into the major trendline next. </p><p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;">ETHEREUM TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME</p><p></p><p>On the 4 hour chart, there’s not much we can glean from this timeframe as the choppy price action inside the range doesn’t give clear levels where to lean on except the main support and resistance defining the range. Nonetheless, the swing low around the 2,462 level could act as a minor support. The buyers might step in there with a defined risk below it to keep pushing into new highs, while the sellers will look for a break to increase the bearish bets into the 2,360 support next.</p><p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;">ETHEREUM TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME</p><p></p><p>On the 1 hour chart, there’s not much we add here but from a risk management perspective, the buyers will have a better risk to reward setup around the 2,360 support, while the sellers will want to see the price breaking below it to extend the drop into new lows.</p><p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;">UPCOMING CATALYSTS</p><p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;"><a href="https://investinglive.com/EconomicCalendar" rel="follow">Today</a>, we have the cloture vote onCLARITY Act. Tomorrow, we have the FOMC rate decision. On Thursday, we get the US Jobless Claims figures. Traders will also keep a close eye on developments in the Middle East.</p> This article was written by Giuseppe Dellamotta at investinglive.com.