Recently, the decline in Ethereum (ETH) prices has become the focus of the market. In January, ETH saw its first major red candle of 2025, with prices dropping from $3600 to $3300. This change significantly marks the fluctuation of market sentiment, especially amid increasing uncertainty regarding the Federal Reserve's monetary policy.
Uncertainty in Federal Reserve policy triggers market volatility
The crypto market, especially assets like Ethereum, has long been extremely sensitive to the Federal Reserve's monetary policy. Recent economic data and comments from Federal Reserve officials have raised market concerns, prompting a reevaluation of whether expected interest rate cuts will be seen in the meeting on January 29. In the past few weeks, as expectations for rate cuts increased, Ethereum briefly broke through $3600. However, with the Federal Reserve's 'hawkish' rhetoric and the market's reassessment of rate cut expectations, ETH prices quickly fell, leading to the first significant red candle of 2025.
Market sentiment has not completely turned to panic
Despite a noticeable correction in ETH prices, the market has not shown signs of large-scale selling; instead, it reflects a 'holding steady' sentiment. According to data from Coinbase, while prices fell, the inflow to exchanges was substantial, primarily driven by strong buying interest. This phenomenon indicates that even with price declines, most Ethereum holders are not in a hurry to sell, showing that their confidence in the market remains strong.
Resilience of retail investors supports the market
During the market adjustment process, the resilience of retail investors has also been a key factor. According to on-chain data, SOPR (Spent Output Profit Ratio) shows that the majority of investors are still in the profit zone rather than the loss zone. Retail investors have demonstrated a strong willingness to hold during this process, which is crucial for suppressing potential selling pressure. Even with short-term market fluctuations, the steady holding behavior of retail investors helps stabilize prices.
The impact of ETFs on the Ethereum market
In the recent market adjustment, the strong performance of ETF (Exchange-Traded Fund) data has injected new confidence into the market. As institutional investors gradually accept the cryptocurrency market, especially through ETFs, market confidence has been boosted. Industry analysts believe that ETFs will become one of the important factors driving the rise of Ethereum and the entire crypto market. It is believed that short-term price corrections will not change the market's long-term optimistic sentiment, especially with new capital inflows from ETFs.
Future outlook: The role of ETFs and institutional funds
Despite the current uncertainty surrounding Ethereum due to Federal Reserve policy, analysts remain optimistic about Ethereum's prospects with the continued entry of institutional investors and the promotion of ETFs. In the short term, prices may be suppressed by macroeconomic factors, but as market sentiment gradually stabilizes and more ETFs are introduced, ETH is expected to regain upward momentum.
The price fluctuations of Ethereum reflect changes in macroeconomic factors and market sentiment. In the short term, the Federal Reserve's policy will continue to influence market trends, but the resilience of retail investors and the positive impact of ETFs may provide support for ETH prices. In the coming months, if ETF investors continue to flood into the market, Ethereum may welcome new upward opportunities. Therefore, although the current correction may make the market feel anxious, in the long run, ETH remains on a healthy growth trajectory.
