Ethereum Drops Below $4,000 as Fed Signals End to Rate Cuts, Fusaka Upgrade Testing Continues

Quick Take

• ETH trading at $3,876.42 (up 0.06% in 24h)
• Federal Reserve signals end to rate cuts, pressuring crypto markets
• ETH price testing support near $3,800 level after breaking below $4,000
• Bitcoin correlation remains strong as both assets react to macro headwinds

Market Events Driving Ethereum Price Movement

The primary catalyst driving Ethereum’s recent price action has been Federal Reserve Chair Jerome Powell’s statement suggesting the latest rate cut may be the last of 2025. This dovish pivot sparked a 2.2% decline in ETH price, pushing it below the psychologically important $4,000 level to around $3,900 earlier this week. The crypto market’s sensitivity to interest rate policy continues to demonstrate the sector’s correlation with traditional risk assets.

In contrast to the macro headwinds, Ethereum’s technical development remains robust. The network’s upcoming Fusaka upgrade has progressed to its final testing phase, completing its second test phase on the Sepolia testnet. A final dry run scheduled for the Hoodi testnet represents the last major milestone before the anticipated mainnet deployment in early December. This upgrade promises improvements to network scalability and transaction cost efficiency, providing a fundamental backdrop for longer-term bullish sentiment despite current price weakness.

The absence of other significant news events in recent days has left ETH price primarily responding to these macro and technical development factors, with trading volumes on Binance spot market reaching $1.5 billion in the past 24 hours.

ETH Technical Analysis: Consolidation Below Key Resistance

Price Action Context

Ethereum technical analysis reveals a challenging setup as ETH price currently trades below its key short-term moving averages. At $3,876.42, Ethereum sits beneath both the 7-day SMA at $3,955.76 and the 20-day SMA at $3,952.15, indicating near-term bearish momentum. However, the asset maintains its position well above the 200-day SMA at $3,339.88, preserving the longer-term bullish structure.

The current price action shows ETH following Bitcoin’s lead, with both assets declining in tandem following the Federal Reserve’s hawkish shift. Trading volume analysis suggests institutional participants remain cautious, with the 24-hour range of $3,804.74 to $3,906.09 indicating compressed volatility relative to recent weeks.

Key Technical Indicators

The RSI reading of 44.27 places Ethereum in neutral territory, suggesting neither overbought nor oversold conditions. This provides room for movement in either direction based on external catalysts. The MACD histogram shows a bullish divergence at 2.0289, indicating potential momentum shifts despite the negative MACD line at -79.0048.

Bollinger Bands analysis reveals ETH price trading in the lower half of the bands, with the %B position at 0.3420 suggesting oversold conditions relative to recent price action. The daily ATR of $203.07 indicates moderate volatility levels.

Critical Price Levels for Ethereum Traders

Immediate Levels (24-48 hours)

• Resistance: $3,952 (20-day moving average confluence)
• Support: $3,675 (immediate technical support level)

Breakout/Breakdown Scenarios

A break below the $3,675 support level could trigger further selling toward the strong support zone at $3,435. Conversely, reclaiming the $3,952 resistance would target the immediate resistance at $4,292, representing the key level needed to restore short-term bullish momentum.

ETH Correlation Analysis

Ethereum continues to exhibit strong correlation with Bitcoin, both assets declining following the Federal Reserve’s policy shift. The correlation remains particularly evident in how both cryptocurrencies responded to traditional market cues rather than crypto-specific developments.

Traditional market impact from the Fed’s stance has created headwinds across risk assets, with cryptocurrencies showing heightened sensitivity to interest rate expectations. This macro environment suggests ETH price movements will likely continue tracking broader market sentiment in the near term.

Trading Outlook: Ethereum Near-Term Prospects

Bullish Case

The successful completion of Fusaka upgrade testing and potential mainnet deployment in December could provide fundamental support for ETH price recovery. A reclaim of the $4,000 psychological level, coinciding with moving average resistance, would target the $4,292 immediate resistance zone.

Bearish Case

Continued hawkish Federal Reserve rhetoric or delays in the Fusaka upgrade timeline could pressure ETH price toward the $3,435 strong support level. Additional macro uncertainty could extend the current consolidation phase below $4,000.

Risk Management

Conservative traders should consider stop-losses below $3,650 to limit downside exposure, while position sizing should account for the current ATR of $203, indicating potential daily moves of approximately 5% in either direction.

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