Ethereum is set for increased volatility as investors prepare for the US election

• Ethereum investors are expecting increased volatility as the US election approaches, given DeFi’s regulatory uncertainties.
• A few whales sold parts of their holdings as opposed to ETH ETF entries.
• Ethereum could recover the $2,395 level if it bounces back on a key trendline.

Ethereum (ETH) fell more than 4% on Thursday as traders expect high volatility as the US election approaches. The election results could trigger a massive price move in ETH due to regulatory hurdles that the DeFi ecosystem has yet to overcome.

Ethereum sees increasing volatility ahead of the US election

Due to regulatory uncertainties surrounding the decentralized finance (DeFi) ecosystem, Ethereum traders are positioning themselves for increased volatility as the US presidential election approaches. The top altcoin’s main value driver comes from the host of DeFi protocols running on its blockchain. Therefore, DeFi regulatory hurdles could affect ETH’s performance.

“The upcoming US election could have a significant impact on ETH, particularly due to its ties to the DeFi ecosystem, which may face regulatory scrutiny depending on the election results,” said Nick Forster, founder of the DeFi options platform , for FXStreet.

Ethereum’s 30-day-to-expiry (DTE) at-the-money (ATM) implied volatility (IV) has risen nearly 7% compared to Bitcoin over the past year. Forster highlighted a notable increase in forward volatility between October 25 and November 8 in ETH and BTC, up 76.6% and 69.8% respectively.

“This data signals that ETH’s increased volatility is a direct reflection of traders’ expectations of increased uncertainty, especially as we approach the US election,” he said.

Several major crypto investors are favoring Republican candidate Donald Trump in the upcoming election due to his public recognition of the industry and his promise to provide favorable regulations.

Additionally, many in the digital asset industry don’t like Democratic vice presidential candidate Kamala Harris either, due to the Securities and Exchange Commission’s (SEC) crackdown on crypto companies under the current regime.

Meanwhile, some Ethereum whales have sold off following the 10% drop since October 1, according to Lookonchain data.

ICO Whale Transactions

• The Whale Ethereum ICO, which received 150,000 ETH during the initial online sale, sold another 19,000 ETH ($47.54 million) in the last two days.
• A whale that let down his assets sold 5,000 ETH ($11.74 million) in the last 24 hours.

In contrast, Ethereum ETFs surprisingly posted net inflows of $19.8 million on Wednesday despite the price drop, according to data from Farside Investors.

Ethereum’s next move could be determined by the key trend line

Ethereum is trading around $2,340 on Thursday, down 4% on the day, with more than $65.8 million in liquidations over the past 24 hours – with long and short liquidations accounting for $57.55 million and 8, respectively. $25 million, according to Coinglass data.

ETH slipped below the $2,395 level on Wednesday amid persistent bearish pressure in the market. ETH is now trying to move towards a key trend line extending from May 27. A bounce back to this level could send the top altcoin back above the $2,395 level.

ETH/USDT Daily Chart

Investors looking to prevent prices from moving below their cost base could support the move, given that ETH’s most in-demand region is the $2,316-$2,383 range. According to IntoTheBlock data, investors purchased 52.58 million ETH during this interval.

However, a move below the trendline will see ETH find support between $2,100 and $2,207.

The Relative Strength Index (RSI) is below its neutral level, downtrending after crossing below its moving average. The Stochastic Oscillator (Stoch) is well into its oversold region, indicating a potential reversal may be imminent.

A daily close of the candlestick below the $2,100 level will invalidate the thesis.