The price of Ethereum was rising today alongside a weakening dollar. Looking through the lens of majors in the crypto market, Ethereum was one of the strongest cryptocurrencies today, approaching the $2,000 level. Ethereum is potentially breaking out of a downtrend today that has been visible in the market since September 2025. Over the course of one month, we are seeing an increase of almost 25%. At the same time, Bitcoin is gaining about 10%.
Monthly changes in Ethereum. July may be the strongest month in exactly one year. Source: Bloomberg Finance LP, XTB
1. Main Growth Factors
- Structural Supply Pressure (Supply Squeeze): The ETH staking ratio has reached a record high of 34%. The locking up of such a large portion of the supply, combined with increasing gas fee burning in Layer 2 and DeFi networks and declining reserves on spot exchanges, significantly restricts market liquidity on the sell side.
- Capital Return to ETFs: Following a weaker period at the turn of June and July, US spot ETH and BTC ETFs recorded positive net flows in the second half of the month.
- Geopolitical De-escalation and Short Squeeze: A temporary halt in mutual attacks between the US and Iran improved global risk appetite. This triggered a cascade of short position liquidations in the cryptocurrency market valued at over $160 million within 24 hours.
Cumulative 20-day purchases of ETH ETFs have risen above $300 million. They could potentially be the highest in the near future since November 2025. Source: Bloomberg Finance LP, XTB
2. Key Market Catalyst: Fed Decision (July 28–29, 2026)
Despite strong fundamentals, the near-term direction of the ETH price depends on the outcome of the US Federal Reserve (FOMC) meeting.
- Fed Scenario: No rate change (68.5%). Potential breakout of the $2,000 level, but with a risk of failing to maintain above this resistance without new volume and new drivers for the crypto market.
- Fed Scenario: 25 bps hike (31.5%). Profit-taking and an immediate price correction. This scenario could partially materialize if Kevin Warsh signals that hikes are coming.
- Fed Scenario: Rate cut (unlikely scenario). Strong bullish momentum with a technical target in the area of the May highs at $2,400 (+20%). However, this scenario could partially materialize if Kevin Warsh is dovish during the conference.
3. Risk Factors
- Institutional Sentiment Volatility: Despite weekly net inflows into ETFs, the end of last week brought sudden outflows, both for BTC and ETH (over $465 million from BTC ETFs alone in two days), indicating that institutional investors are still quickly taking profits before macroeconomic events.
- EU and US Regulatory Background: Work on the US Clarity Act is being delayed due to political disputes in Congress, which introduces additional legal uncertainty.
Summary
Ethereum is at a key inflection point. If investors manage to sustainably break the psychological barrier of $2,000 with the support of a dovish message from the Fed, the technical target of the uptrend setup is at $2,400 (around the 23.6 retracement). A hawkish signal from the Federal Reserve, however, could trigger a quick pullback towards recent supports.
Source: xStation
Crypto assets are highly volatile and carry substantial risk. This material is for informational purposes only and does not constitute financial advice.
The 23.6% retracement metric is derived from Fibonacci retracement, a technical analysis tool that uses horizontal lines to indicate potential support or resistance levels based on key percentage levels calculated from the Fibonacci sequence. More about Fibo.
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