Ethereum (ETH) failed to rally as anticipated after the Federal Reserve announced a 25 basis point interest rate cut, witnessing a 4.50% dip in value shortly afterward. This unexpected decline has put a damper on hopes for a $4,500 breakout, leaving investors pondering Ethereum’s next move.
Earlier predictions of a rally similar to last year’s response to a 50 basis point rate cut didn’t materialize, and ETH’s price slid from $3,890 to $3,624. Although there was a slight recovery, on-chain indicators, like the price-Daily Active Addresses (DAA) divergence, suggest this could be a temporary fakeout.
Ethereum’s price divergence, as reported by Santiment, has plummeted to -98.28%, indicating declining user participation—a bearish sign. The current trajectory might lead to a steeper price fall if the trend persists. Additionally, the Coinbase Premium Gap indicator has lowered to -1.96, highlighting rising selling pressures and diminishing demand among US investors.
Technical analysis reveals a head-and-shoulders pattern on the 4-hour chart, a classic indicator of potential trend reversals from bullish to bearish. With decreasing trading volume and a break below the neckline, ETH could drop to $3,501. However, if trading volume and buying pressure increase, prices might aim for $4,109, potentially pushing toward $4,500.
