Ethereum (ETH) is navigating a crucial week as traders assess a blend of macroeconomic factors, institutional movements, and strengthening technical signals. With the Federal Reserve scheduled to announce its next rate decision, market participants are keenly observing how Ethereum’s recent momentum interacts with a wider risk-on environment.
The second largest cryptocurrency by market cap has staged an impressive rebound, breaking through key resistance levels and attracting renewed interest from both retail and institutional investors. Ethereum recently surged past $3,300, briefly hitting $3,400 after experiencing a notable 6% jump within the last 24 hours.
The rally comes as traders anticipate a high probability—close to 90%—that the Federal Reserve will implement a 25-basis-point rate cut. Such rate cuts generally enhance liquidity conditions, which have historically favored digital assets. Adding to the bullish sentiment, Bitcoin’s recovery above $94,000 has also instilled further confidence in the market. Notably, Ethereum has outperformed Bitcoin on a relative basis, with the ETH/BTC ratio hitting its highest point since late October, suggesting a capital shift from Bitcoin to Ethereum.
Moreover, spot Ethereum ETFs witnessed inflows of $177.7 million on December 9, surpassing Bitcoin’s inflows on the same day, a sign of growing institutional interest in the second-largest cryptocurrency.
Institutional Moves Fueling Optimism
A critical catalyst for this shift in sentiment has been BlackRock’s filing for the iShares Ethereum Staking Trust ETF. This fund would not only provide exposure to ETH’s price but also to staking rewards, expanding access to yield-bearing strategies. Analysts suggest that such products could significantly enhance liquidity inflows into Ethereum, especially as institutional portfolios diversify beyond Bitcoin. This development coincides with centralized exchanges holding their lowest percentage of ETH since 2015, now at approximately 8.7% of the total supply.
Furthermore, large buyers such as Bitmine Immersion have accumulated billions of dollars in ETH over recent months, indicating a tightening of supply conditions that could propel further price increases.
Technical Indicators Signal Further Upside
Technical analysis reveals that Ethereum has decisively broken above a downward trendline that had constrained rallies for nearly two months. Momentum indicators like MACD and RSI indicate growing buying strength, even as prices approach overbought territory.
Having broken through the $3,300 barrier, attention now shifts towards the next significant resistance level at $3,500. Wave-pattern analysis indicates a strong potential to reach $3,600. Analysts like Captain Faibik posit that a confirmed breakout could ignite a rally of up to 30%, targeting the $4,200 to $4,300 range, contingent on the persistence of bullish conditions.
As all eyes turn to the Fed’s impending decision, the trajectory of Ethereum’s momentum remains under scrutiny. Will the bullish patterns hold, or will external factors quell the current excitement? Investors are poised to watch closely.
Cover image from ChatGPT, ETHUSD chart from Tradingview
