Ethereum (ETH) is going through a pivotal week as traders weigh a mix of macroeconomic expectations, institutional developments and strengthening technical signals.
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As the Federal Reserve prepares to make its next rate decision, market participants are watching how Ethereum’s recent momentum interacts with the broader risk environment.
The second largest cap cryptocurrency has already seen a notable rebound, breaking key resistance levels and attracting renewed interest from retail and institutional investors.
ETH's price sees some gains on low timeframes as recorded on the daily chart. Source: ETHUSD on Tradingview
Fed Expectations Lead to Reassessment of Ethereum Position
Ethereum rose above $3,300 and briefly approached $3,400 after seeing a 6% jump in the last 24 hours.
This rebound comes as traders assess a high probability, close to 90%, that the Federal Reserve will announce a rate cut of 25 basis points. Lower interest rates tend to improve liquidity conditions, a factor that has historically supported digital assets.
Bitcoin’s rally above $94,000 boosted market sentiment, even as Ethereum outperformed on a relative basis. The ETH/BTC ratio reached its highest point since late October, indicating a shift of capital from Bitcoin to Ethereum.
Spot Ethereum ETFs also saw inflows of $177.7 million on December 9, surpassing Bitcoin’s inflows on the same day.
Institutional moves add to bullish sentiment
One of the major catalysts for this change was BlackRock’s filing of the iShares Ethereum Staking Trust ETF. The fund would provide exposure not only to the price of ETH, but also to staking rewards, expanding access to yield-bearing strategies.
Analysts note that such products could increase liquidity inflows into Ethereum, especially as institutional portfolios diversify beyond Bitcoin. This filing comes at a time when the amount of ETH held on centralized exchanges has fallen to its lowest level since 2015, approximately 8.7% of the total supply.
Large buyers, including Bitmine Immersion, have accumulated billions of dollars of ETH in recent months. Together, these developments indicate a tightening of supply conditions.
Technical breakthroughs reinforce the trend
Chart analysts point out that Ethereum has broken out of a downtrend line that previously capped rallies for almost two months.
Momentum indicators including MACD and RSI show increasing strength from buyers despite approaching overbought territory. Ethereum’s breakout above the $3,300 area has shifted focus towards the next resistance level at $3,500, with wave pattern analysis suggesting upside potential towards $3,600.
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Analysts such as Captain Faibik say a confirmed breakout could support a rally of up to 30%, targeting the $4,200-$4,300 region if bullish conditions persist. However, the Fed’s upcoming decision remains a key variable in determining whether momentum continues or fades.
Cover image from ChatGPT, ETHUSD chart from Tradingview
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