Why Ethereum May Struggle to Hold Above $3,000 This Week

January 30, 2025 by Mutuma Maxwell

• Ethereum’s price is at risk of dropping below $3,000 ahead of the FOMC meeting.
• Traders expect market volatility based on the Federal Reserve’s stance on interest rates.
• The Federal Funds Rate is likely to stay between 4.25% and 4.50%, with a 99.5% probability.

Ethereum’s (ETH)  price remains at risk of dropping below $3,000 as the Federal Open Market Committee (FOMC) meeting approaches. Traders expect market turbulence as the Federal Reserve’s stance on interest rates could impact crypto assets. Investors closely watch key levels, with $3,000 as a crucial psychological barrier.

How Will Ethereum Price React to FOMC?

The FOMC’s two-day policy meeting will likely influence Ethereum’s short-term price action. If the Federal Reserve keeps interest rates steady, short-term volatility may rise in the crypto market. However, any unexpected shift in policy could trigger a stronger reaction.

Market expectations suggest a 99.5% probability that the Federal Funds Rate will stay between 4.25% and 4.50%. Risk assets like Ethereum could see a bullish rally if Jerome Powell signals a potential rate cut. However, if he reinforces a cautious approach, ETH may face downward pressure.

Political pressure could also influence investor sentiment, though the Fed operates independently. Former President Donald Trump has called for lower interest rates, citing economic factors such as declining oil prices. Powell, however, has consistently emphasized that the Fed bases decisions on data, not external influence.

Key Ethereum Price Levels to Watch

Technical indicators show that Ethereum’s first major support level is $3,057. If the price breaks below this level, the next crucial support is $3,011, where $1.52 billion in long positions could be liquidated. A move below $3,000 could cause further cascading sell-offs.

Crypto investor Andrew Kang has warned about the high leverage risks in Ethereum below the $3,000 mark. According to his analysis, Ethereum’s price could drop between $2,200 and $2,500 if selling pressure intensifies. Traders closely monitor Bitcoin’s stability, as its movement often dictates the broader market direction.

On-chain data supports the bearish outlook, significantly increasing Ethereum’s exchange supply. Between January 20 and January 29, ETH balances on exchanges rose from 10.35 million to 10.69 million. This shift suggests investors may be preparing to sell or use Ethereum as collateral in uncertain conditions.

Market Sentiment and Potential Outcomes

ETH’s price action hinges on the Fed’s policy decision and subsequent market reaction. If Powell signals rate cuts to support economic stability, the crypto market may experience a relief rally. Conversely, ETH could face further downside pressure if rates remain unchanged with no dovish signals.

Traders should cautiously approach the upcoming volatility and monitor Bitcoin’s movement for broader market cues. If Bitcoin holds above key resistance levels, ETH could stabilize and recover. However, a break below $3,000 may trigger a liquidation event, presenting risks and opportunities for investors.

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