Ethereum's native token Ether (ETH) has plunged by more 20% after establishing its record loftier at around $4,867 on Nov. 10, 2022. Even so, the sharp cost pullback does not mean ETH can't pursue a new record high in the side by side few months, as several widely-tracked technical, macroeconomic and on-chain indicators propose.

1 of these indicators envisions Ether'due south price reaching $5,000 in the first quarter of 2022 while others look are poised to back up the bullish bias.

ETH toll painting falling wedge

Ether's contempo price correction is painting a potential classic bullish reversal design known as "falling wedge."

In item, falling wedges brainstorm broad at the top but contract every bit the cost moves lower. As a result, the price action forms a conical shape that trends lower as the reaction highs and reaction lows converge. Traders realize a bullish bias simply after the price decisively breaks above the wedge's resistance.

Every bit a effect, expectations remain high that the ETH toll would pause above its falling wedge resistance in the coming sessions. In doing and so, it would rise past as much every bit the maximum distance betwixt the wedge'due south upper and lower trendline when measured from the breakout betoken.

That roughly puts the price target for Ether at $5,000.

ETH deposits to exchanges drop

Traders typically move their tokens to exchanges when they intend to sell/trade them for either fiat, stablecoins or other cryptocurrencies.

Generally, a higher number of transactions made to crypto trading platforms reflects a high selling sentiment in the market. Conversely, if the token transactions plunge, they bear witness a potent belongings sentiment in the marketplace.

Data collected by blockchain analytics service Glassnode evidence that the number of on-chain Ether deposits to exchanges dropped to its 23-month low on Jan. 3.

ETH number of exchange deposits. Source: Glassnode

Additionally, another Glassnode metric that tracks the number of Ether addresses sending ETH to exchanges also reported declines over the final xxx days, the aforementioned period that saw the ETH/USD rate dropping almost eleven%.

Ethereum number of addresses sending to exchanges. Source: Glassnode

Meanwhile, the total Ether balance across all the exchanges has been in a downtrend since Aug. 2022, suggesting that ETH investors are in information technology for the long haul as its price rose from nearly $400 to a little over $3,800 in the aforementioned menses.

Ethereum remainder on exchanges. Source: Glassnode

Cheap coin here to stay?

Ether's $1,000-plus plunge from November. 2022 to date came majorly in the wake of the Federal Reserve's hawkish turn.

The U.S. cardinal bank decided to accelerate the unwinding of its $120 billion a month asset purchase programme, followed by iii rate hikes in 2022 from its near-nil levels, to stem rising inflation. Its loose monetary policy was one of the principal catalysts behind similar price rallies across Ethereum, Bitcoin (BTC) and other crypto markets.

ETH/USD and BTC/USD weekly toll chart. Source: TradingView

Only the Fed's efforts to tame aggrandizement from its current half-dozen.8% level with three rate hikes may not impact Bitcoin and Ethereum prices in the long run. For example, Antoni Trenchev, managing partner of crypto lender Nexo believes that cheap money is hither to stay.

"The No. 1 influencing factor for Bitcoin and cryptocurrencies in 2022 is central bank policy," he told Bloomberg. He added:

"Cheap money is here to stay, which has huge implications for crypto. The Fed doesn't accept the stomach or courage to withstand a ten%–xx% collapse in the stock market, along with an adverse reaction in the bail market place."

Hungarian-born billionaire Thomas Peterffy too said that investors should allocate at least 2%–3% of their net portfolio to cryptocurrencies like BTC and ETH in instance the fiat money "goes to hell."

Related: More billionaires turning to crypto on fiat inflation fears

Additionally, Bridgewater Associates founder Ray Dalio revealed that he has been property BTC and ETH in his portfolio against the risks of cash devaluation led by college aggrandizement.

The views and opinions expressed here are solely those of the author and do non necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your ain research when making a decision.