Ethereum (ETH) is heading into an important week as traders assess macroeconomic expectations, institutional developments, and strengthening technical signals.
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With the Federal Reserve set to make its next interest rate decision, market participants are watching how Ethereum's recent momentum interacts with the broader risk environment.
The second-largest cryptocurrency has already seen a notable rally, breaking key resistance levels and sparking 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
Expectations from the Federal Reserve have led to a price correction of Ethereum positions.
Ethereum surged past $3,300 and briefly approached $3,400 after registering a 6% rise in the last 24 hours.
The rally comes as traders are pricing in a high probability (90%) that the Federal Reserve will announce a 25 basis point rate cut. Lower interest rates tend to improve liquidity conditions, a factor that has historically supported digital assets.
Bitcoin's recovery above $94,000 boosted market confidence, but comparatively, Ethereum performed better. The ETH/BTC ratio has reached its highest point since late October, indicating a shift of capital from Bitcoin to Ethereum.
The spot Ethereum ETF also recorded inflows of $177.7 million on December 9, surpassing Bitcoin inflows on the same day.
Institutional movements add to the optimistic mood
One of the key catalysts for this change was BlackRock's filing of the iShares Ethereum Stake Trust ETF. The fund will provide exposure to ETH prices as well as staking rewards, expanding access to yield-bearing strategies.
Analysts note that these products could increase liquidity inflows into Ethereum, especially as institutional portfolios diversify beyond Bitcoin. The report comes at a time when the amount of ETH held on centralized exchanges has fallen to its lowest level since 2015 (about 8.7% of total supply).
Large buyers, including Bitmine Immersion, have accumulated billions of dollars worth of ETH in recent months. Collectively, these developments indicate a tightening of supply conditions.
Technical breakthrough strengthens trend
Chart analysts highlight that Ethereum has crossed the downward trend line that had previously limited its uptrend for almost two months.
Momentum indicators including MACD and RSI show increasing buying power despite approaching overbought territory. With Ethereum breaking through the $3,300 area, focus shifted to the next resistance level of $3,500, and wave pattern analysis suggests potential upside towards $3,600.
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Analysts such as Captain Faibik argue that if bullish conditions persist, a confirmed breakout could support a rally of up to 30% targeting the $4,200-$4,300 region. But the Fed's upcoming decision remains a key variable in determining whether momentum will sustain or cool.
Cover image by ChatGPT, ETHUSD chart by Tradingview
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