Ethereum’s Fate Hinges on Federal Reserve Policy Meeting

Crypto markets are in a state of suspended animation this Wednesday, with all eyes fixed on the U.S. Federal Reserve's impending interest rate decision. Against this backdrop of macroeconomic anticipation, Ethereum's price has been consolidating sideways near the $3,300 level. The recent successful implementation of the Fusaka upgrade raises a pivotal question for traders: could a rate cut provide the catalyst for the next significant price surge?

Currently trading at approximately $3,297, Ethereum has stabilized following a test of its support zone around $3,100 earlier in the week. The weekly peak was established just below $3,400. Market participants now view the $3,500 resistance level as the next critical target. Whether this threshold is breached before year-end is widely seen as dependent on the Fed's announcement and the subsequent press conference led by Chairman Jerome Powell. With liquidity conditions thin on exchanges, the potential for sharp price swings in either direction remains elevated.

The CME FedWatch Tool indicates market expectations are heavily skewed, with an 89% probability priced in for a 25-basis-point rate reduction. Such a move would lower the target range to 3.50%-3.75%, marking a third consecutive cut. A confirmed easing of monetary policy could provide a tailwind for risk-sensitive assets like Ethereum. Conversely, should Powell strike an unexpectedly hawkish tone or rates remain unchanged, the psychologically significant $3,000 support level could quickly come into focus.

Fusaka Upgrade Lays Foundation for Long-Term Growth

Unlike previous network updates that triggered immediate "sell-the-news" reactions, the Fusaka upgrade—which went live on December 3—appears to be fostering a more sustained, fundamental value proposition. The technical enhancements are designed to bolster the network's core infrastructure for the future.

Should investors sell immediately? Or is it worth buying Ethereum?

Key enhancements include:

• PeerDAS: This feature paves the way for massive scaling of Layer-2 networks.
• 8x Blob Capacity: Transaction fees on major rollups like Arbitrum and Optimism are expected to drop dramatically due to this increased data availability.
• Deflationary Mechanism: Optimized block limits could sustain deflationary pressure on ETH supply, provided network activity remains robust.

Market analysts suggest the upgrade could eventually enable the broader Layer-2 ecosystem to process over 100,000 transactions per second. The market's reaction has been measured so far, implying that these long-term advantages may be gradually priced in over time rather than immediately.

Shrinking Supply Meets Institutional Accumulation

On-chain metrics from Glassnode reveal a tightening supply dynamic. The proportion of Ethereum held on centralized exchanges has dwindled to roughly 8.7%—the lowest level recorded since 2016. Concurrently, capital continues to flow into staking and restaking protocols, further reducing the amount of ETH readily available for trading.

Notably, large wallet addresses holding a minimum of 1,000 ETH increased their positions during the recent dip to $3,100. This confluence of declining exchange supply and institutional accumulation may set the stage for pronounced price movements should demand accelerate. The fundamental supply and demand equation for Ethereum is undergoing a significant shift, adding another layer to its price narrative as it awaits direction from the world's most influential central bank.