The Federal Reserve just set out a policy With interest rate cuts for the second consecutive year, the base interest rate has been lowered to a range of 3.75 to 4%. In theory, loosening monetary policy should lead to an increase in risk assets like cryptocurrencies. But the market reaction told a different story. Ethereum (ETH) price falls by more than 5%Signaling traders are not convinced that this rate cut is an obvious bullish signal. Let’s take a closer look at why.
Ethereum price prediction: What the Fed’s move really means
A Fed rate cut was expected, but Chairman Powell’s comments dampened enthusiasm. His refusal to commit to further rate cuts in December created uncertainty. Investors had been pricing in aggressive monetary easing, so the cautious tone felt like a cold shower.
Another big announcement was the end of quantitative tightening (QT) on December 1st. This means the Fed will stop shrinking its balance sheet, effectively injecting more liquidity into the system. Normally, this would be a bullish number for cryptocurrencies, but weak employment data and persistent inflation complicate matters.
So while the policy shift favors risk assets in the long run, short-term volatility is returning, especially as markets reassess just how dovish the Fed is.
Ethereum price prediction: bears regain control
The daily chart of Ethereum price shows a decisive rejection near the mid-Bollinger Band (around $3,900), followed by a sharp decline towards $3,550. The Heikin Ashi candlestick turned bright red, confirming bearish momentum once again.
The Bollinger Bands (BB) are widening, a classic sign of increased volatility, and ETH just ended below its 20-day simple moving average (SMA). This breakdown places immediate support near the lower end of the Bollinger Band at $3,650, which is currently being broken intraday. If the decline continues, the next downside targets will be around $3,490 and $3,250.
This chart also suggests that the recovery attempt in late October, when ETH price failed to regain the $4,000 resistance, failed. This rejection strengthens the subordinate-superior structure and suggests that sellers are still in control.
So the $3,500 zone is the key battleground. If we lose that level convincingly, ETH risks accelerating towards $3,000.
Macro meets markets: Liquidity and sentiment
Crypto markets thrive on liquidity, and in theory the end of QT should add fuel. But traders are wary because Powell’s tone was not entirely dovish. Add in a weak labor market and inflation still above 3%, and you create uncertainty that markets don’t like.
The lack of up-to-date economic data (as the government’s data freeze continues) only adds to that uncertainty. Investors don’t know how deep the economic slowdown will be, so they’re hedging rather than investing entirely in risky assets. In the case of Ethereum, this hesitation leads to cautious positioning and a low-conviction rally.
Still, there is a twist. If inflation data cools again before the December meeting, traders could quickly turn bullish on the next rate move. That’s the wild card to watch.
What will happen to the price of Ethereum in the future?
The problem is that Ethereum’s long-term structure remains intact as long as it remains above $3,200. That is where the major trendline support from the July bull market remains aligned. A rebound from this level could lead to a short-covering rally towards $3,800.
However, for a sustained bullish reversal, ETH price needs two things.
- A clear signal from the Fed that further rate cuts are being considered.
- A decisive daily close above the mid-band (~$3,900) to re-establish bullish control.
If neither happens, ETH could continue to fall into November and test $3,250 to $3,000 before buyers return.
Ethereum’s current decline is not just about the charts, it’s about trust. Traders wanted a clear dovish line. President Powell gave them uncertainty. This combination usually leads to short-term weakness, but a rebound is possible once transparency returns.
Therefore, although the short-term outlook looks bearish, medium-term traders should keep a close eye on the $3,200 to $3,000 area. If the Ethereum dollar stabilizes there while the Fed signals further rate cuts, a strong rebound towards $4,000 could follow.
Until then, caution prevails. The Fed may have cut interest rates, but the market isn’t celebrating it yet.