Ethereum Price Prediction: Strong Bounce Off $3,700 – Is ETH Ready for Its Next Leg Up?

Ethereum (ETH) stopped its latest sharp drop at $3,700 yesterday and has already recovered to $3,850, while trading volumes remain high at 8% of the token’s circulating market cap.

Crypto liquidations spiked to $954 million yesterday as the crypto market was shaken up by comments from the head of the Federal Reserve, Jerome Powell.

The leader of the U.S. central bank said that “a further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it.”

These remarks negatively impacted crypto prices as a rate cut for December was considered a done deal by analysts.

Paired with the uncertainty that President Donald Trump brought to the table amid his unexpected tariff increase on Chinese goods, Powell’s comments could trigger the beginning of a much deeper correction.

Market Sentiment Sours as Trump and Powell Derail Altseason

The Fear and Greed Index had progressively recovered to 42 ahead of the FOMC’s meeting, but has now dropped to 32 once again as investors continue to be cautious amid an uncertain outlook in the macroeconomic landscape.

Fear and Greed Index – Source: CoinMarketCap

What worries the Fed the most is how Trump’s policies could impact inflation. In September, prices increased at a slower rate than analysts expected. Nonetheless, this 100% tariff increase could lead to a severe spike in the price of goods across the United States.

Ethereum ETF net outflows in the past couple of days spiked to $260 million. These vehicles have only ended 3 out of the last 11 days with positive net inflows, as the October 10 flash crash spooked investors.

Although Powell’s comments are not supportive of further easing, they are also not fully discarding a rate cut in December.

Data from FedWatch shows a dramatic change in the odds that the Fed will lower rates by then. Just a week ago, 91% of analysts expected that outcome, compared to only 63% as of today.

Hourly Chart Confirms Strong Buying Pressure at $3.7K

The daily chart shows that ETH hit a key support once again at $3,700 and bounced off this level strongly. This could be the beginning of a full-blown recovery now that the market has revisited its forecasts.

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

This would be at least the fourth time that ETH bounces off this support since October 10, underscoring the huge buying interest that still exists at this level.

Although this is an important shift in the narrative, the market may have overreacted, and strong hands seem to have dumped their tokens to sweep traders and enter long positions at a much lower price.

The Relative Strength Index (RSI) shows that ETH has entered a stage of consolidation. Hence, as long as the token stays above its 200-day exponential moving average (EMA), the worst may be over.

ETH could make it back to $4,000 if positive momentum gains traction after this latest bounce. The hourly chart shows the strength of the token’s recovery upon hitting $3,700, and positive momentum is already spiking in this lower time frame and could lead to some interesting gains as the American session begins.

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

The weekend’s low volumes could either contribute to pushing ETH to much higher levels if FOMO kicks in or they could tank the token if sellers take advantage of this low liquidity to further flush out the weaker hands.