Ethereum (ETH) fell by nearly 4% over the past 24 hours following a 25 basis point interest rate hike by the European Central Bank (ECB). The move, while widely anticipated, triggered a sell-off amid persistent inflation in developed economies and rising oil prices, which recently surpassed $100 as U.S. military actions against Iran escalated tensions in the Middle East.
The ECB's Governing Council described the outlook as highly uncertain in a press release, noting risks to the upside for inflation and to the downside for economic growth. In the United States, market expectations for a Federal Reserve rate hike at the next FOMC meeting have surged to 74%, with analysts suggesting the U.S. central bank may mirror its European counterpart's hawkish stance. This shift is weighing on short-term crypto performance, as it could lead to more severe revisions in the Fed's dot plot.
According to FedWatch data, the probability of an additional 25 basis point hike in December has jumped to nearly 60%, a significant increase from levels seen just two weeks ago. This macroeconomic pressure has pushed market sentiment to its lowest point since the mid-August rally began. The Crypto Fear and Greed Index currently stands at 68, approaching neutral territory.
Technical indicators had previously signaled a potential pullback, with Ethereum's Relative Strength Index hitting extreme overbought levels at 88 last month. However, some analysts argue that these hawkish central bank moves were already priced in, offering hope for a market recovery. On the daily chart, Ethereum maintains a bull flag pattern, which remains valid unless the price breaks below the $2,350 lower bound. If that support level fails, the next area of interest is the 200-day exponential moving average (EMA).
Conversely, the $2,400 level, which acted as strong resistance for weeks, may now function as a demand zone, potentially allowing the token to rebound once current volatility subsides. Beyond price action, on-chain metrics suggest a bullish mid-term outlook. Trading volumes have steadily increased, and a crossover between key moving averages for volume is imminent. Additionally, the MVRV Ratio, which tracks Ethereum's market value against the cost basis of tokens in circulation, is nearing a buy signal as it approaches the zero line. These factors suggest that recent declines may present an entry point for investors anticipating the next phase of Ethereum's market cycle.