Is Ethereum Gearing Up for A December Breakout?

• Ethereum’s consolidation aligns with the Fed’s liquidity reversal ending QT on December 1.
• ETH holds strong support near $4K, with resistance at $4,807 signaling potential breakout.
• Liquidations total $93.1M as long positions reset, hinting at renewed positioning.

Ethereum’s consolidation is aligning with a policy shift by the U.S. Federal Reserve. As expected, on Wednesday, the Fed cut rates by 25 basis points happened and sources confirmed that quantitative tightening (QT) will end on December 1. The move by the Fed effectively stops the balance sheet runoff that has drained liquidity since 2022, which can lead to renewed risk appetite across markets.

Fed Ends QT, Pumping Liquidity Back into the System

Bull Theory highlights that this is the first meaningful divergence from liquidity tightening since policy began two years ago. QT previously had taken trillions out of the system, tightening credit and pressuring risk assets like crypto. Halting QT will provide banks with more reserves, ease lending, and overall market liquidity should stabilize.

Fed Chair Jerome Powell called the rate cut a “risk management” move, stressing that it’s meant to maintain stability, not start a new cycle of easing. Powell noted that inflation remains above the target but is cooling, while employment remains firm. He also stated, “We haven’t made a decision about December,” showing internal divisions among committee members on further cuts.

Still, the central bank’s decision to stop balance sheet reduction is a fundamental liquidity pivot. This change could lead to capital rotation back into Bitcoin, Ethereum, and other digital assets, particularly as institutional investors respond to improving macro liquidity conditions.

ETH Holds Key Support Ahead of Breakout Zone

Market analyst Wolf on X observed that Ethereum is “holding the broadening wedge backtest,” noting that former resistance is now acting as strong support. In October, Ethereum moved steadily between $3,968 and $4K range, which once acted as resistance earlier in 2024 but has now turned into support. This setup forms a strong base for a possible breakout as December nears. The main barrier remains around $4,807, where the price has repeatedly struggled to move higher. 

Source: Wolf on X

As per the analyst, if Ethereum breaks above this level, it could climb toward $8,084, with possible highs between $13,000 and $14,000 by mid-2026. On the other hand, it might see a short dip to around $5,900–$6,000 before continuing upward. Trading volume near 669.34 shows steady buying activity, suggesting investors are accumulating rather than selling.

If Ethereum sustains above the $4,000 level, analysts expect liquidity-driven inflows to accelerate, especially from institutions and possible ETF allocations. However, a breakdown below that range could prompt a temporary correction toward $3,350–$2,950 before recovery attempts.

Related: Ethereum Whale Deposits $500M USDT Ahead of Stable Launch

Technical Indicators Show Consolidation Phase

At the press time, Ethereum is trading at $3,921, down 2.65% in the past day. Its market value stands at $473.15 billion, while daily trading volume has increased by 3.96% to $39.35 billion, according to CoinMarketCap.

The RSI is at 44.73, just under the neutral 50 level, showing slight selling pressure but not enough to call it oversold. A move above 50 would suggest buyers are gaining strength. The MACD shows a gentle shift between weak bullish and neutral signals, with the narrowing bars hinting that the market could be settling down.

Source: TradingView

Ethereum has managed to stay strong between $3,600 and $3,800 but hasn’t been able to close above $4,800. This shows traders are building positions while waiting for a clear direction. If the price stays above $3,850 and momentum improves, it could rise toward $4,200–$4,400. But if it slips below $3,800, it might fall further to around $3,400 or even $3,000 before buyers step back in.

Data from Coinalyze shows that Ethereum saw about $93.1 million in liquidations over the past day, with 80% coming from long traders. Bybit led with nearly $50 million in losses, followed by Binance. OKX saw moderate liquidations below $20 million, while Huobi, BitMEX, and Bitfinex reported under $10 million each.

Source: Coinalyze

Recent market moves wiped out traders using high leverage on long positions, clearing the way for a possible price rebound. As more liquidity flows back in and big investors take interest, Ethereum’s steady phase under current market conditions could be building up to a strong move upward in December.

Ethereum staying above key support levels while overall market liquidity improves shows its growing stability. With quantitative tightening ending, trading activity picking up, and investors accumulating again, Ethereum may soon shift from a quiet phase to an upward trend as December nears.