🔥 ETH Dips Under $4,200 — Powell’s Words Could Ignite the Next Firestorm

With Fed Chair Powell's Jackson Hole speech approaching, Ethereum investors anticipate short-term volatility.

A record number of validator queue departures and ETH ETF outflows may potentially hurt market sentiment.

ETH hit $4,100 on Tuesday as technical signs suggested bearishness.

Short-term volatility, validator queue dropouts, and institutional withdrawals drove Ethereum down 5% on Tuesday, breaking $4,200. Traders are wary ahead of Fed Chair Jerome Powell's appearance at the Jackson Hole Economic Symposium on Friday.

Ethereum fell below $4,200 on Tuesday, extending its 10% slump since the July US Producer Price Index (PPI) inflation news shook the market last Thursday. According to CryptoQuant, Ethereum has experienced long liquidations of over $1.1 billion, indicating de-risking before Powell's address on Friday.

"Traders are bracing for a volatile end to August, with all eyes on Jackson Hole," crypto options platform Derive founder Nick Forster said Tuesday.

On Monday, Derive's 7-day ETH implied volatility (IV) jumped from 68% to 73%, while the 30-day IV remained modest. "[It's a] sign that markets expect heightened volatility in the immediate term," he said.

The CME FedWatch Tool showed market participants' views of a rate drop at the September Federal Open Market Committee (FOMC) meeting slipping below 90% and to 82% on Tuesday after last week's higher-than-expected inflation statistics.

"If Powell signals a continued hawkish stance, we could see a rapid correction in digital assets, particularly for BTC and ETH," he warned. However, dovishness might boost the market. He stated that Derive now expects ETH to drop below $4,000 by September, up from 45% to 60%.

According to Validatorqueue.com, Ethereum's validator departure queue has reached a record high of 927,000 ETH.

The second greatest net outflow for US spot Ethereum ETFs since July was $196.6 million on Monday, according to SoSoValue.


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