Ethereum Bounces Off Key Support and Nears $3,000 – Will ETH Fully Recover?

Ethereum (ETH) has gone up by nearly 6% in the past 24 hours to $2,970 as the crypto market seems to be starting to recover.

Last week, comments from the head of the New York Federal Reserve once again turned the odds in favor of a 25 basis points rate cut in December.

Macroeconomics, as always, tend to play a key role in shaping the valuation of digital assets, including Ethereum (ETH).

FedWatch’s Rate Cut Probabilities for Next FOMC Meeting – Source: CME Group

The odds of a rate cut during the next FOMC meeting have now surged to 80%, up from a previous 42% print. This could be an early signal that the market is about to reverse course and could be a great opportunity to scoop up assets like ETH as they make their way back to new highs.

In addition, last week’s jobs report surprised analysts as non-farm payrolls from September surged to 119,000, which was more than twice the consensus estimate for the period.

A strong jobs market favors another rate cut as it gives the Fed confidence that the economy is doing well.

Liquidations Could Spike if ETH Rises Above $3K

Bears are being wiped out today as a result of this uptick, with $200 million worth of short positions already being blown up in the past 24 hours. My bet is that, if the price climbs above $3,000, liquidations will spike to even higher levels.

This is both a key technical and psychological resistance that bulls need to recapture if they want to reignite the rally.

Trading volumes have surged by 62% in the past 24 hours as well, currently sitting at $31 billion and accounting for almost 9% of the token’s circulating market cap.

Despite the uptick, the Fear and Greed Index remains heavily depressed at 12, indicating that market participants are still fearful amid the recent decline.

Ethereum has to climb to at least $3,100 to break even this year, after losing 35% in the past month alone. Meanwhile, it is still 40% away from its recent all-time high.

ETH Could Target $3,400 If Positive Momentum Gains Traction

Looking at the daily chart, the price has jumped off the $2,800 level strongly. This is a former area in which the price consolidated for weeks before it started to climb toward its new all-time high.

ETH/USD Daily Chart (Coinbase) – Source: TradingView

There seems to be significant buying pressure at this level. After a 40% monthly drop, ETH may have already found its floor. This shift in the market’s perception of what could happen during the next FOMC meeting could be the buy signal that the market needs to put an end to the decline.

The Relative Strength Index (RSI) confirms a potential change in the trend’s trajectory as the price jumped above the 14-day moving average. If positive momentum gains traction, the first stop for ETH could be the $3,400 level first.

At that point, the price will most likely hit the upper bound of the price channel and either break above it or resume its downward trajectory and retest the $2,800 in a few weeks.

It will all depend on how market sentiment evolves now that analysts see higher odds of a rate cut.