Something big has happened! Something major is coming! The Federal Reserve's interest rate cut is crucial for ETH in the short term, but the market is now reacting positively, with everyone wanting to make some profits and run; in the medium to long term, how much ETH can rise will depend on whether there is enough money macro-wise, the conditions on the blockchain, and how strict the regulations are.
December 10th, the Federal Reserve held the FOMC meeting and cut interest rates by 25 basis points, bringing the federal funds rate down to 3.75% - 4.00%. This means that there will be more money in the market, which theoretically is good for high-risk investments like cryptocurrencies. As soon as the interest rate cut news was announced, ETH's price surged to $3445, indicating that initially, everyone was very optimistic about the liquidity boost and willing to pay a high price for ETH. However, the good times did not last long; on the morning of December 11th, ETH's price quickly dropped to around $3270.
This is a significant impact on ETH, with a gap between expectations and reality. Those who have leveraged long positions should hurry to close them. As more people sell in the short term, the price pressure increases. By December 11, due to price fluctuations, the amount involved for those who were forced to sell their leveraged ETH reached $350 million, indicating that high-leverage positions were largely cleared. Although the ETH price has corrected in the short term, the overall trend of the Federal Reserve's interest rate cuts will make risk assets more valuable. Historically, cryptocurrencies have performed well when there is ample money and good liquidity; for instance, during the interest rate cuts in 2019-2020, both Bitcoin and ETH saw significant increases.
Compared to other altcoins, ETH has two advantages. First, institutional money has been continuously flowing in through ETFs; in December, there was a day when the Ethereum ETF saw an inflow of $125 million, with a total inflow of over $425 million in a month, which is real new money. Second, ETH has expected upgrades technically; after the Fusaka upgrade, network efficiency has improved, and the Layer-2 ecosystem is becoming increasingly active, giving ETH more practical value.
The resistance level above is at $3350 - $3380, which was the lower limit of the previous price fluctuation range and has now become resistance; the support level below is at $3200 - $3250, where the trend line and Fibonacci retracement overlap. If this support level cannot hold, the price may look further down to $3150 - $3180.
The amount of open contracts in the futures market has risen to $38.3 billion, indicating that both long and short traders are still in a fierce battle. If the price breaks below $3200, those who have leveraged long positions may be forced to close one after another, which would further drive down the price. From the exchanges' situation, in December, the net outflow of ETH reached $43.6 million, indicating that long-term holders are still accumulating ETH, but there are more sellers in the short term, which creates pressure that takes time to digest.
In December, the U.S. will release CPI and PPI data. If these data show a slowdown in inflation, it may make people more confident that interest rate cuts will continue in 2026, which could revive the positive outlook of ample money in the market. There is also good news on the regulatory front; Coinban has obtained a global license in Abu Dhabi, and the SEC has withdrawn its lawsuit against NFT projects. This can improve the compliance environment in the industry and reduce the risk premium caused by policy uncertainty.
ETH has a deflationary logic, after the Merge upgrade, the overall deflation rate is -0.217%. Although recently due to low gas fees on the ETH network, there has been a slight temporary inflation, the long-term deflationary model remains unchanged. Moreover, addresses holding 100,000 to 1,000,000 ETH increased their holdings by 280,000 in 5 days, indicating that large funds have confidence in the future performance of ETH. Therefore, at this time, Ah Bai plans to ambush a wave $ETH and expects to earn 200 points easily. Friends who want to catch this big opportunity, come join the chat room gathering.
If ETH can hold the support level of $3200, there is a possibility of a mid-term upward push to test the range of $3400 - $3500. However, to break through, there needs to be sufficient trading volume; if the volume is insufficient, the price may continue to fluctuate.
