Ethereum News Today: Fed Caution and DeFi Hacks Drive Ethereum's Plunge Below $3,500

Ethereum's price has plunged below $3,500, testing critical support levels amid a broader cryptocurrency market downturn driven by macroeconomic uncertainty, DeFi security breaches, and massive trader liquidations. The collapse follows a volatile week in which the crypto market shed over $100 billion in value, with Bitcoin dipping below $106,000 and altcoins like Solana and BNB also suffering sharp declines, according to a The Economic Times report. Analysts are now closely watching whether Ethereum can stabilize near $3,500–$3,600 or face further declines toward the psychological $3,000 threshold, a Brave New Coin analysis.

The immediate trigger for the selloff was a hawkish shift in U.S. Federal Reserve rhetoric. Chair Jerome Powell's comments that a December rate cut is "not a foregone conclusion" reignited fears of prolonged high interest rates, prompting risk-off trading across asset classes, as The Economic Times reported. This sentiment was compounded by a string of DeFi exploits, including a $110 million hack of the Balancer protocol and a $93 million loss at Stream Finance, which eroded investor confidence in Ethereum's security. Chainalysis data revealed over $1.14 billion in crypto futures liquidations, with Ethereum-specific losses totaling $85.6 million in a single 24-hour period.

Despite the turmoil, Ethereum's fundamentals show resilience. Over 36 million ETH is currently staked on the Beacon Chain, reducing circulating supply and signaling long-term holder confidence, as The Economic Times noted. Whale activity has also been notable, with large addresses accumulating 1.64 million ETH (~$6.4 billion) in October, according to Brave New Coin. Some analysts argue these moves suggest institutional players are "buying the dip," though mixed signals persist as older holders have trimmed positions, per The Economic Times.

Technical indicators paint a cautious picture. Ethereum's Relative Strength Index (RSI) fell to 31, indicating oversold conditions, but key support levels at $3,550–$3,600 remain under pressure, per Brave New Coin. A breakdown below $3,300 could trigger a retest of the $3,000 level, historically a strong support zone, according to a Bitget analysis. Conversely, a rebound above $3,600 may set the stage for a recovery toward $3,900–$4,000, though momentum indicators like MACD remain bearish, according to an FXStreet report.

The market's institutional underpinnings are also fraying. Ethereum ETFs have seen outflows of $136 million in a single day, with BlackRock's ETHA leading the exodus, an FXStreet report said. Futures open interest has dropped to $44.72 billion from a $63 billion peak in October, reflecting reduced retail and institutional demand. This trend aligns with broader crypto weakness, as Bitcoin's dominance surged above 60% as traders shifted to safer assets, The Economic Times reported.

Long-term optimists, however, remain unconvinced. Fundstrat's Tom Lee and other analysts argue Ethereum's growing staking yields, robust network activity, and upcoming "Fusaka" upgrade—aimed at improving scalability—position it for a rebound, according to The Economic Times. On-chain metrics, including $2.82 trillion in October stablecoin transactions and rising institutional adoption, further underscore Ethereum's role as a foundational blockchain, as reported by The Economic Times.

With the U.S. nonfarm payrolls report due on November 7, market participants await clarity on macroeconomic conditions. Weak employment data could reignite risk-on sentiment, while a strong reading might extend the downturn. For now, Ethereum's fate hinges on its ability to defend $3,500—a level that, if breached, could signal deeper pain ahead.