25.01.202310:56 Forex Analysis & Reviews: Technical Analysis of ETH/USD for January 25, 2023

Crypto Industry News:

The Bank of America (BOA) global research team released a report earlier this week on global cryptocurrencies, digital assets and central bank digital currencies (CBDC).

"Digital currencies seem inevitable. We see distributed ledgers and digital currencies such as CBDCs and stablecoins as a natural evolution of today's monetary and payment systems. [...] In our view, CBDCs that use distributed ledger technology have the potential to revolutionize global financial systems and can be the most significant technological advancement in the history of money," the bank said.

The report explains that there are currently 114 central banks studying CBDC, representing 58% of countries worldwide and over 95% of global GDP. He also notes that central bank digital currencies "do not change the definition of money, but they are likely to change how and when value is transferred over the next 15 years."

According to Bank of America, "CBDC issuances by central banks seem inevitable for three reasons." First, "they can make cross-border and domestic payments and transfers more efficient." In addition, they "may reduce the risk of central banks losing monetary control" and "increase financial integration."

The report adds that "the private sector is critical to the development and issuance of CBDCs," explaining:

"Central banks and governments cannot build new financial systems based solely on distributed ledger technology and have indicated that they will use the private sector to drive digital asset innovation. We expect private sector beneficiaries to emerge at all stages of CBDC implementation."

The bank also drew attention to certain risks. The issuance and adoption of CBDCs could also increase the frequency of bank runs if not properly designed. In addition, during times of tension, people could withdraw deposits and exchange them for CBDCs.

Technical Market Outlook:

The Ethereum cryptocurrency rally had been capped at the level of $1,664 after the bulls hit the extremely overbought market conditions on the H4 time frame chart. The market is in the pull-back mode now and the nearest technical support is seen at $1,487. The key technical support is located at $1,350 and only clear and sustained breakout below this level would change the short-term outlook to bearish.

Weekly Pivot Points:

WR3 - $1,834

WR2 - $1,702

WR1 - $1,628

Weekly Pivot - $1,570

WS1 - $1,496

WS2 - $1,438

WS3 - $1,307

Trading Outlook:

The Ethereum market has been seen making lower highs and lower low since the swing high was made in the middle of the August 2022 at the level of $2,029. The key technical support for bulls at $1,281 was broken already and the new swing low was established at $1,074. There is a clear test of the 50 WMA located at the level of $1,080, so any breakout below the moving average and a weekly candle close below moving average will be considered as another indication of the down trend continuation. If the down move will be extended, then the next target for bears is located at the level of $1,000.