Ethereum (ETH) has struggled to maintain its position above the $4,000 mark, leading to questions about the sustainability of its recovery. Despite briefly re-establishing itself above this threshold, ETH has faced headwinds, leaving investors uncertain about its short-term trajectory. Several factors contribute to this struggle, including technical resistance, broader market sentiment, and macroeconomic influences.
Technically, Ethereum has encountered resistance around the $4,200 level, which previously served as a support zone. This area coincides with the 50-day moving average, further reinforcing it as a significant hurdle. On October 29, 2025, ETH was hovering just below the 100-day moving average, which is acting as short-term resistance. A successful break and close above $4,200 could pave the way for a retest of the $4,600 supply zone. However, failure to overcome this resistance could signal further weakness, potentially leading to a retest of the $3,800 support level, and possibly even lower toward $3,000.
Market sentiment also plays a crucial role. The cryptocurrency market is known for its volatility, and Ethereum is no exception. Investor sentiment can shift rapidly based on news events, regulatory developments, and overall market trends. The Fear and Greed Index, a measure of market sentiment, has fluctuated between "fearful" and "neutral," reflecting the uncertainty surrounding Ethereum's price. Long liquidations spiked ahead of the Federal Reserve meeting, as market participants closed positions to protect themselves from extreme price swings.
Macroeconomic factors are increasingly influencing the cryptocurrency market, including Ethereum. The U.S. Federal Reserve's monetary policy decisions, particularly regarding interest rates, can have a significant impact. On October 29, 2025, market analysts anticipated a 25 basis point rate cut by the Fed. While this was largely priced in, any deviation from this expectation could trigger a sharp reaction in the crypto markets. Some experts believe that economic data supports a more aggressive 50 basis point reduction, which could catalyze a sharper rally in crypto markets. However, unexpected decisions, such as President Trump's tariff increase on Chinese imported goods, could prompt the Fed to reconsider its rate cut plans, potentially causing a major drop in crypto prices.
On-chain analysis provides some insight into Ethereum's potential. Ethereum's exchange reserves have continued their steady decline, reaching the lowest levels in years. This suggests reduced selling pressure from spot holders, which is generally a long-term bullish indicator. However, futures market metrics are neutral, indicating no excessive leverage on either side. This suggests that a breakout will require fresh catalysts to ignite.
Despite the current challenges, some analysts remain optimistic about Ethereum's future. If the Fed signals a dovish pivot, Ethereum could lead the charge. BlackRock's recent bullish stance on Ethereum also underscores growing institutional confidence in the asset. If all goes as planned, the stage seems set for a move toward the $4,700 area in the mid-term once the dust settles.
Ultimately, whether Ethereum can sustain a recovery above $4,000 depends on a combination of factors. Overcoming technical resistance, improving market sentiment, and favorable macroeconomic conditions are all crucial. While the near-term outlook remains uncertain, Ethereum's long-term potential remains a subject of interest.
