Ethereum (ETH) is having a pivotal week as traders consider macroeconomic expectations, institutional developments, and strengthening technical signals.
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As the Fed prepares for its next interest rate decision, market participants will be watching to see how Ethereum’s recent momentum interacts with the broader risk-on environment.
The second-largest capped cryptocurrency has already shown a notable rebound, breaking through key resistance levels and attracting renewed interest from both 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 prompt repricing of Ethereum positions
Ethereum soared above $3,300 and at one point approached $3,400 after posting a 6% gain in the past 24 hours.
The rally comes as traders are pricing in a nearly 90% chance that the Federal Reserve will announce a 25 basis point (bp) rate cut. Lower interest rates tend to improve liquidity conditions, a factor that has historically supported digital assets.
Despite Ethereum’s relative outperformance, Bitcoin’s rally above $94,000 added further confidence to the market. The ETH/BTC ratio has reached its strongest level since late October, indicating a shift of capital from Bitcoin to Ethereum.
The Spot Ethereum ETF also saw inflows of $177.7 million on December 9, exceeding Bitcoin inflows on the same day.
Institutional movements that heighten the bullish mood
One of the big catalysts behind this change was BlackRock’s application for the iShares Ethereum Staking Trust ETF. The fund provides exposure not only to the price of ETH but also to staking rewards, expanding access to yield-producing strategies.
Analysts note that such products could increase liquidity inflows to Ethereum, especially as institutional investor portfolios diversify beyond Bitcoin. The 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 total supply).
Big buyers, including Bitmine Immersion, have amassed billions of dollars worth of ETH in recent months. Taken together, these trends indicate that supply conditions are becoming tighter.
Technical breakout strengthens trend
Chart analysts emphasized that Ethereum has broken above the downtrend line that had capped gains for nearly two months.
Momentum indicators such as MACD and RSI show that buyers are gaining momentum even though we are approaching overbought territory. With Ethereum breaking above the $3,300 zone, focus has shifted to the next resistance level at $3,500, and wave pattern analysis suggests there is upside potential towards $3,600.
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Analysts such as Captain Fibig argue that if the bullish situation persists, a confirmed breakout could support up to a 30% rally and target the $4,200-$4,300 region. However, the Fed’s future decisions remain a key variable in determining whether momentum continues or slows.
Cover image from ChatGPT, ETHUSD chart from Tradingview
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