Ethereum Rockets After Fed Decision – Is a New All-Time High Incoming?

Ethereum (ETH) saw an explosive rally in wake of Wednesday’s Fed meeting, and while a lot of those gains were given back on Thursday, new developments suggest a rising chance of a near-term rally.

Ethereum rallied from the low $1,900s on Wednesday to nearly $2,100 and was last just below $2,000.

The Fed slowed the pace of its quantitative tightening (QT) program on Wednesday, a strong signal to the market that a new liquidity wave is on the horizon, if not here just yet.

Liquidity in the financial system is the life blood for altcoins like Ethereum . And a lack of it since 2022 amid the Fed’s aggressive monetary tightening approach and quantitative tightening has hobbled growth in the altcoin market.

While Bitcoin has been carried by narratives like the hugely successful 2024 ETF launch and its growing acceptance as “digital gold”, most major altcoins have struggled to keep pace.

The lack of liquidity in the US financial system has meant that alt-coin seasons, like that in early 2024 and in wake of Trump’s election victory have disappointed.

Indeed, a darkening of the macro backdrop as risks to US economic growth rise and inflation threatens to rebound has weighed heavily on the market in recent weeks.

But the prospect of the end of QT and, eventually, the start of a new liquidity wave, could substantially lift the mood in the market.

Could Ethereum soon rally back to record highs?

Where Next for the Ethereum Price?

While it has rallied a solid 13% from earlier monthly lows and snapped a short-term downtrend, Ethereum is yet to break back above its 21DMA.

This is a level that has offered stiff resistance going pretty much all the way back to the start of 2025.

That suggests price risks still remain titled to the downside in the short-term. Moreover, a more nuanced analysis of the macro backdrop also suggests risks remain tilted to the downside.

Yes, the Fed is slowing QT and that means we are one big step closer to a new wave of liquidity.

But a lot needs to happen first before that new wave of liquidity comes. Indeed, QE liquidity waves have always in the past followed some sort of crisis/market turmoil.

And that might be exactly what we get in 2025 – the US economy is at risk of tilting into recession amid Trump’s trade wars and D.O.G.E austerity and the US government needs to refinance a massive $9 trillion of its debt.

Things need to get a lot worse first before the Fed pulls the trigger on a new wave of money printing.

That suggests that Ethereum potentially has a other further to drop in 2025, before QE sends it to the moon in 2026.

That’s looking very far ahead. Savvy traders focused on the market’s short-term outlook should closely watch upcoming US economic data releases and trade war news.

As well failing to reclaim its 21DMA, Ethereum has also so far failed to reclaim the long-term support-turned-resistance $2,100 level.

Risks remain tilted towards a retest of mid-2023 lows around $1,500 before QE, and general crypto industry growth thanks to regulatory support from the Trump administration sends us to new all time highs in the coming years.

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