Is the Decline in Ethereum Prices Concluded? Here’s What to Expect Next

The price of Ethereum (ETH) experienced a tumultuous aftermath following the US Federal Reserve meeting on Friday, plummeting to around the $3,100 mark before rebounding sharply to just above $3,400.

According to CoinMarketCap, this leaves the Ethereum price approximately unchanged over the last 24 hours, while losses from last week’s highs just above $4,100 are currently around 16.5%.

The Fed significantly impacted sentiment across both traditional financial markets and the crypto sector on Wednesday, raising concerns about persistent inflation and adjusting their forecast for rate cuts in 2025 from four to just two.

The US equity markets, which were arguably due for a correction after their remarkable ascent to new record highs following Trump’s election victory last month, faced considerable declines at that time.

S&P 500 FALLS 3% IN BIGGEST POST-FED DROP SINCE MARCH 2020

— *Walter Bloomberg (@DeItaone) December 18, 2024

It is therefore not surprising that a risk-sensitive asset like Ethereum (ETH), along with other cryptocurrencies, also suffered significant losses.

Nonetheless, Friday’s price movements indicate that the worst may be behind, suggesting a potential period of stabilization and even recovery as the year draws to a close.

The Ethereum price appears poised to create a bullish dragonfly doji daily candle, which typically forms around price bottoms.

ETH also found robust support as it approached its 200-day moving average, with strong indications that dip buyers are actively entering the market to bolster the price.

Additionally, a wallet associated with the Trump-affiliated crypto project World Liberty Financial was observed acquiring over $2 million in ETH.

Donald Trump’s World Liberty Financial (@worldlibertyfi) spent another 2.5M $USDT to buy 722.2 $ETH 2 hours ago, after the price dropped by ~6%!
Since November 30, this fund has spent $47.5M on 6 crypto assets: $ETH, $WBTC, $LINK, $AAVE, $ENA, and $ONDO (tweet ). Of this,… https://t.co/8v3pGVG8Hr pic.twitter.com/Ix3h8Y1hxc

— Spot On Chain (@spotonchain) December 20, 2024

Assuming no additional macroeconomic surprises occur in the upcoming weeks (which seems unlikely given the lack of significant US data or Fed events), attention should shift back to bullish narratives such as the incoming Trump administration’s pro-crypto policy stance and the potential for a new golden era for crypto in 2025.

This suggests that the groundwork may be laid for a gradual recovery in the Ethereum price as the year concludes, provided the US dollar and US yields cease their upward trajectory.

While calls for new all-time highs before the year ends may be overly ambitious, a steady recovery in the coming sessions back toward $4,000 appears plausible.

Ethereum Price – When New All-Time Highs?

The Ethereum price’s notable rejection of its latest attempt to retest yearly highs in the $4,100 range has caused some investors to feel anxious.

However, they should remain calm. Firstly, the prevailing theme in crypto at present is adoption – Wall Street absorbing supply, discussions of a crypto industry boom over the next few years in the US, and the potential establishment of Bitcoin national reserves, which would further legitimize the emerging industry.

Federal Reserve Chair Jerome Powell says the Fed is “not allowed to own Bitcoin”
They weren’t allowed to own Corporate Bonds before Covid either.
Rules change… pic.twitter.com/3UBBUuKtdF

— Bitcoin Archive (@BTC_Archive) December 18, 2024

Thus, while the Fed may not cut rates as much as anticipated next year, which is less favorable for risk assets like stocks and crypto, the tailwinds from adoption are likely to outweigh any macroeconomic headwinds. Furthermore, the macroeconomic environment is not truly a headwind; we remain in a strong US economy while the Fed is still inclined to ease rates, which many long-term investors view as a “Goldilocks” scenario for risk assets.

Secondly, ETH’s historical cyclical relationship with BTC provides further reason for optimism regarding the medium-term outlook for Ethereum prices.

In previous cycles (such as 2020/21 and 2017), Bitcoin has typically surged to new record highs one to two months ahead of ETH.

Bitcoin broke out in mid-November, indicating that it has been just over a month since then. This sets the stage for a potential surge in Ethereum prices in January as it follows Bitcoin’s trajectory.

Concerns regarding ETH’s recent underperformance compared to BTC and its perceived “poor tech” relative to competitors like Solana or Sui should not dissuade investors.

While those blockchains may perform well, Ethereum continues to be the dominant blockchain in DeFi, holding approximately 56% of total value locked, according to DeFi Llama, and has US ETFs along with the support of BlackRock, one of Wall Street’s major players.

.@BlackRock buying $ETH while everyone panic selling: https://t.co/FYX6l6bJ9y pic.twitter.com/rB48lRarUj

— Ethereum Daily (@ETH_Daily) December 12, 2024

A recent comment from a BlackRock executive indicated that, rather than launching additional crypto ETF products, their current focus is on promoting their existing BTC and ETH ETFs to a broader investor audience.

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