Ethereum Jitters Ahead of Clarity Act Vote and FOMC Decision

Ethereum has shown remarkable resilience in recent weeks despite an increasingly negative macro backdrop. The US monthly core inflation data exceeded expectations, securing a Federal Reserve rate hike on Wednesday, while oil prices have risen above $100, adding to inflationary pressure and tightening monetary policy expectations.

The growing optimism for the CLARITY Act cloture vote may be providing short-term support to offset this negative macro pressure. The legislation seeks to provide a more defined regulatory framework for the US crypto industry, including clearer division of responsibilities between the SEC and CFTC, and introduces regulatory requirements for crypto exchanges, brokers, and dealers.

A successful vote could pave the way for greater institutional participation, deeper market liquidity, and additional capital entering the crypto market. However, even a successful vote may not be positive, as traders may shift their attention from the Clarity Act back to monetary policy and the macro picture, triggering a 'sell the fact' reaction.

The immediate catalyst is the cloture vote on the CLARITY Act today at 2:15pm ET. The FOMC rate decision follows tomorrow, while the US Jobless Claims figures will be released on Thursday. Traders will also keep an eye on developments in the Middle East.