Understand the reasons for the 7% decline in Ethereum’s price following the Federal Reserve’s FOMC meeting in this Ethereum price prediction.
The crypto markets experienced a significant decline following the Fed’s FOMC meeting’s announcement that rate cuts would be reduced in 2025. This led to a 7% decline in Ethereum’s closing price on Wednesday. The current price of Ethereum is $3,700. The double-top formation on the four-hour chart suggests that a sell signal may be imminent for ETH and that a reversal may be imminent. This configuration constitutes a sell signal. As its name implies, the technical formation frequently reverses the uptrend due to the presence of two local tops. Will Ether reverse the bull trend and precipitate another double-digit correction? Let us investigate.
Ethereum Price Today: What is the Reason for the 7% Decrease in ETH?
The value of ETH decreased by 7% on Wednesday following the FOMC meeting, as the Federal Reserve suggested that it may implement two rate cuts in 2025. Although rate cuts are dovish and induce a market rally, the reduced number of rate cuts, two compared to the anticipated four, has prompted speculators to interpret them in a bearish light, resulting in the sell-off.
Even traditional markets were affected by this decision, as the crash was not restricted to crypto markets. The S&P500 closed Wednesday with a 2.90% decline, losing 175.48 points.
Emergence of Sell Signals
The Ethereum price has formed a double-top on the four-hour chart due to the crypto market crash induced by the FOMC. This technical formation is a sell signal and suggests that the uptrend may be reversing. To date, Ethereum has experienced an 11% increase in December, establishing the 2024 high at $4,111. However, the double-top formation has been completed due to the recent 14% decline, which has lowered it to $3,583.
A breakdown below the $3,656 and $3,539 support levels will confirm a successful breakout from the double-top setup. ETH could experience a 13% decline to $3,080 in this scenario.
Conversely, the double top formation may be ineffective if bulls mount a robust recovery, resulting in a rebound from $3,656. For this to occur, the Ethereum price must surpass $4,111 and transform it into a support floor. This development will render the sell signal invalid and drive the cost of Ethereum upward, ideally to a new all-time high of $5,000.
Investors withdraw 190,000 ETH from exchanges
The supply of ETH held on exchanges decreased from 10.80 million on December 16 to 10.61 million as of December 19, as indicated by data from Santiment. This decrease suggests that the centralized platforms have lost nearly 190,000 ETH, valued at $7 billion.
Investors are sufficiently assured to refrain from storing their tokens on hot wallets, such as exchanges, where they can be quickly sold during periods of panic, which is why a decrease in supply is considered bullish. Therefore, these investors are optimistic about Ethereum’s future performance and have no intention of selling ETH.
What is the future of Ethereum?
If the Ethereum price bounces off the $3,500 to $3,600 support levels and surpasses $4,000, a rally may begin to retest the ATH at $4,878. Ethereum’s price prediction suggests it may even approach a new all-time high in certain instances.
Nevertheless, it may be challenging for ETH to preserve its position if Bitcoin experiences a decline. In this scenario, a collapse of the $3,500 support level could result in an additional double-digit crash to $3,100 or $3,000.
