Ethereum (ETH) price has seen its first significant red candle of the year, indicating a definitive change in market sentiment.
The fall coincides with risk-off sentiment spurred by growing worries that some in the market are now starting to believe the U.S. Federal Reserve won’t deliver on a widely touted interest rate cut during its Jan. 29 meeting. But if this development has all markets collectively raising a brow in concern, it’s far from a fully fleshed-out panic.
The Impact of the Federal Reserve’s Speculation
For decades, sentiment in the market, especially the crypto market, which is extremely sensitive to macroeconomic movements, has primarily been influenced by the Federal Reserve’s monetary policy decisions.
Ethereum price rally to over $3,600 in recent weeks was bolstered by expectations of a potential rate cut in January. But, recent economic data and remarks by Fed officials have prompted speculation that the central bank may refrain from rate cuts and send the market recalibrating.
Today, Ethereum’s price dropped sharply to $3,300. This is the most significant red candle of 2025 to date and signifies the added uncertainty around the Fed’s policy pathway. Nevertheless, there was no sharp sell-off on the market, suggesting holders aren’t running back in great numbers.
According to data from Coinbase, Ethereum market dynamics tell a different story amid a price dip. The Coinbase Premium Index, which measures the difference in price between Coinbase and other exchanges, shows that Coinbase is attracting strong buying momentum.
Ethereum price movement is intertwined with exchange inflows, which can be seen in a closer examination of cryptoQuant charts. Prices have fallen. However, there are large inflows to exchanges, this could indicate that most Ethereum holders are moving their assets to sell.
Further suggesting that Ethereum holders have been less enthusiastic sellers than buyers. This contrasts market corrections, where a price drop is usually associated with a rise in exchange inflows. It is also another indication of how confident Ethereum investors continue to be.
Retail Investors on Ethereum Price Remain Steadfast
If we look at the condition outside of retail influence, it was intense. However, the behavior of retail investors is another key factor that has recently helped bring Ethereum’s stability through price correction.
Meanwhile, data on the chain also shows retail investors hold up pretty well, with very few sell-offs on the major exchanges such as Binance and OKX. This trend is supported by relatively quiet activity in deposit addresses, implying that smaller investors hold their positions through the market’s volatility.
SOPR (Spent Output Profit Ratio) measures the profitability of coins moved on the chain. The resilience of retail investors is also visible.
The SOPR data indicates investors are stuck in profit territory, not loss territory. It shows that the overwhelming majority of the market is still doing alright financially. Here, the steadfastness of retail investors has been instrumental in holding back potential selling pressure. It’ll also be key to breaking Ethereum’s fall from too significant a drop.
How ETH ETFs Affected Ethereum Price
The positive mindset regarding exchange-traded funds (ETFs) is one of the key factors supporting the positive Ethereum market. The release of strong ETF data earlier this week was a much-needed boost to market confidence.
The cryptocurrency industry sees ETFs as a gateway for institutional investors to enter the space, and positive developments in this space have tended to ripple out into prices.
Today’s red candle dampened the short-term outlook, but analysts are convinced renewed ETF-related buying activity would help Ethereum price regain momentum. If tonight’s data on ETFs awakens the greed of buyers once again, as could happen, then all of these could work against the current downtrend and create the foundation for another rebound in the following few days.
