Ethereum Under Pressure: Fed Policy, Technical Signals, and the Future of Cryptocurrency

The Ethereum price fell 8% on Tuesday, a move that stems from the broader correction in the crypto market. This comes as ETH approaches crucial support levels, putting pressure on the $3.000 level. Analyzing the background to this development is important, especially for investors navigating the volatile cryptocurrency landscape.

Ram Ahluwalia, chief investment officer at Lumida Wealth, points to the recent Federal Reserve meeting in October as one of the drivers of this crypto Sell-off. On October 29, the central bank announced its second rate cut of the year. However, the subsequent press conference, in which Fed Chairman Jerome Powell expressed doubts about a possible further cut in December, led to unrest in the markets.

Ahluwalia's analysis shows that lower interest rates are generally beneficial for speculative assets like cryptocurrencies. The desire for safe havens, such as gold, increased further after President Trump announced new tariffs on China, causing investors to flee cryptocurrencies. This is putting pressure on the ETH price, with potentially far-reaching consequences.

Technical Analysis of the ETH Price

Technical analysts at The Birb Nest have identified critical levels to watch. They point out that the Ethereum price has fallen below a key weekly support level, indicating a large divergence that can only be corrected if the price overcomes it. A break below the altcoin's yearly target of $3.337 could push the ETH price down to $2.800. A positive reversal requires a recapture of $4.000, with a close above this level on a weekly basis.

The ETH/BTC pairing is also under scrutiny. Prices are currently below the annual target of 0.0355, and reclaiming this level is crucial for a rise towards 0.04. Until this breakout occurs, a possible retest around 0.0325–0.03 is expected.

Some experts, such as Ali Martinez, warn against overly optimistic expectations. He points to a worst-case scenario where the Ethereum price fails to approach $4.000 again, potentially dropping to $2.400 or even $1.700. Such losses would mean ETH would need to rise another 45% to return to current levels, which could also trigger a broader correction in the altcoin market.

ETH is currently trading at $3.100, a significant 32% gap from its historical highs. This raises the question of whether these peaks could be retested before the end of the year, unless a new recovery movement occurs before the weekly close.

Frequently Asked Questions

What are the main factors influencing Ethereum's current price decline?
Ethereum's decline is being influenced by signals from the Federal Reserve on interest rates, political instability due to new tariffs on China, and a shift of investors to safer assets.

Which technical levels matter for the Ethereum price?
Key technical levels include $3.337 as a yearly target and $4.000 for a positive reversal. Rejections below these levels could further depress the price.

What are the possible consequences if Ethereum falls below $2.400?
A drop below $2.400 would not only push ETH further down but could also potentially damage confidence in the broader altcoin market, leading to a broader correction in the sector.