Summary

  • Ethereum remains under pressure as markets reassess the growth implications of the blue sweep, particularly the prospect of greater fiscal restraint and tighter AI regulation. Meanwhile, uncertainty surrounding the US-Iran conflict continues to weigh on risk sentiment. Attention now turns to tomorrow’s US CPI report, with hotter inflation data likely triggering further selling on hawkish Fed repricing, while softer data could spark a short-term relief rally.

Ethereum sold off sharply on Thursday as the stock market rout triggered a wave of risk aversion across financial markets. The shift in sentiment weighed on the crypto market too, as traders reassessed the negative implications of the blue sweep for the macroeconomic outlook.

The Democratic Congress should bring greater fiscal restraint and tighter regulation, including additional restrictions on AI infrastructure investment. Given how leveraged the US economy is to AI investment, a reversal would have significant consequences for the broader economy.

Moreover, a Democratic Congress does not limit Trump's ability to impose tariffs or continue military operations against Iran. So, all in all, the future US growth outlook turned even more negative, unless the conflict with Iran finally comes to an end.

There haven’t been new developments on the US-Iran front. Trump told CNN that the US is unlikely to resume military action against Iran if negotiations make sufficient progress on Tehran’s nuclear programme and the reopening of the Strait of Hormuz. However, he stressed that any decision to avoid further strikes would depend on Iran agreeing to a strong enough deal, adding that the US remains ready to take military action if necessary.

US Secretary of State Rubio said negotiations with Iran have made little progress, describing Tehran's demands as unacceptable, but stressed that Washington remains open to pursuing a diplomatic resolution.

Tomorrow we also get the US CPI report. The data could seal a rate hike for the December FOMC meeting, with traders already pricing in a 79% probability. If we get a hot report, we could see Ethereum coming under renewed pressure on a hawkish repricing. Soft data, on the other hand, could lead to a short-term relief rally, but it wouldn’t change the fundamental trend.

ETHEREUM TECHNICAL ANALYSIS – DAILY TIMEFRAME

On the daily chart, we can see that Ethereum broke above the downward trendline but eventually tanked to new lows. The sellers will continue to target the 1,900 level. If the price gets there, we can expect the buyers to step in, with a defined risk below the level, to position for a rally into the 3,400 resistance. The sellers, on the other hand, will look for a break lower to increase the bearish bets into the 1,500 level next.

ETHEREUM TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

On the 4 hour chart, we have a downward trendline defining the bearish momentum. If we get a pullback, we can expect the sellers to lean on the trendline, with a defined risk above it, to keep targeting the 1,900 level. The buyers, on the other hand, will want to see the price breaking higher to pile in for a rally into new highs.

ETHEREUM TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

On the 1 hour chart, there’s not much we can add here as the sellers will have a better risk to reward setup around the trendline, while the buyers will need a breakout to open the door for new highs. The red lines define the average daily range for today.

UPCOMING CATALYSTS

Tomorrow we have the US CPI report. On Thursday, we get the latest US Jobless Claims figures. On Friday, we conclude the week with the US PPI data.

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