Ethereum Sentiment Tumbles Following Fed’s Latest Rate Cut

The Federal Reserve delivered its third consecutive 25-basis-point rate cut on December 10, confirming the easing path many traders had anticipated. While the announcement briefly sparked optimism across cryptocurrency markets, Ethereum (ETH) quickly saw sentiment swing from excitement to disappointment as prices reversed sharply.

Traders React to Fed’s Decision

Before the announcement, most market participants expected the rate cut. Polymarket data indicated overwhelming confidence in a December reduction, mirroring expectations from the October meeting. Social media sentiment around Ethereum surged, reflecting widespread enthusiasm. Yet the mood shifted when a large Bitcoin whale moved approximately $100 million in BTC an hour before Jerome Powell spoke, sparking speculation that insiders anticipated a surprise move.

The Fed’s announcement confirmed the 25 bps cut and revealed plans to restart short-term Treasury bill purchases in December to maintain adequate bank reserves. Analysts from Greeks.live highlighted that the $40 billion T-bill program provides temporary support but does not signify a new monetary expansion. As liquidity thins toward year-end, defensive options positions dominate, with put contracts trading at a premium.

Watch how Ethereum’s price reacted around the Fed interest rate decision and why sentiment shifted after the announcement in the broader crypto market. 

Ethereum Prices Slide Amid Retail Panic

ETH rallied to roughly $3,433 immediately after the FOMC news, but retail traders chasing the surge were soon caught off guard as prices dropped back to around $3,170. Santiment’s sentiment metrics showed a rapid collapse in positive-to-negative ratios, highlighting how quickly optimism can evaporate in response to profit-taking by larger holders.

According to Santiment, “Bullish news can create short-term bearish pressure when retail investors buy heavily, while whales use the opportunity to offload coins.” Despite the short-term volatility, Ethereum remains down roughly 3% on the day and about 10% over the past month, though slightly higher than the previous week.

Bitcoin mirrored Ethereum’s struggles, dipping from $94,000 during the announcement to just above $90,000, marking a 2% decline in 24 hours and 3% over the past week.

Outlook for 2026

Some analysts remain cautiously optimistic for early 2026. With inflation trending toward the Fed’s target and stable economic indicators, liquidity could improve, giving digital assets room to rebound. Smart-money wallets have accumulated over 42,000 BTC since late November, suggesting that larger investors are positioning ahead of potential market recovery.

Santiment noted, “If U.S. economic data remains steady, 2026 may provide the breathing room digital assets need to recover from recent volatility.”

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