Ethereum price is up 4% over the past 24 hours and is trading at $2,947 as of 4 a.m. EST, while trading volume is up 41% to $36 billion.
Ethereum’s price rise comes as weaker US inflation drives positive market sentiment even as the Bank of Japan (BOJ) raised interest rates. The US consumer price index (CPI) rose 2.7% in the 12 months to November, up from 3% in September. This surprised analysts and indicated a slowdown in price pressure.
🚨BREAKING: The US CPI came in below expectations at 2.7%, versus an expected 3.1%.
This shows that inflation is cooling.
The FED now has more room for interest rate cuts and monetary easing.
This is really bullish for the markets. pic.twitter.com/ZWrzqwNBaA
— Bull Theory (@BullTheoryio) December 18, 2025
Falling costs for hotels, milk, clothing and housing, along with holiday discounts, boosted investor confidence. That means softer inflation increases the likelihood of interest rate cuts by the US Federal Reserve, fueling optimism in cryptocurrencies like Ethereum and Bitcoin.
While some risks remain from past rates and tight labor supply in sectors like agriculture, hospitality and construction, the market reacted strongly to the cooling CPI, showing that US economic signals are still having an outsized impact on crypto sentiment.
Don’t fight the BOJ: five real interest rates are the explicit policy. $JPY up to 200, and $BTC to a grand. pic.twitter.com/PdZh87ruVI
— Arthur Hayes (@CryptoHayes) December 19, 2025
Nevertheless, the BOJ increased interest rates by 25 basis points to 0.75%, the highest level in 30 years, marking the second increase this year. Governor Kazuo Ueda indicated that further increases could follow in 2026, although real interest rates remain negative, keeping Japanese financial conditions accommodative.
The yen weakened to around 156 per dollar, reducing the immediate risks of the carry trade disappearing. Bitcoin showed volatility in response to the BOJ hike, with past rate hikes historically leading to declines of 23-31%. The yield on 10-year US government bonds rose to 4.14% and the dollar index (DXY) reached 98.52.
Ethereum bearish OI-weighted funding spikes, market stabilizes
The price of Ethereum OI-weighted funding ratewhich showed what traders pay or earn on their positions was largely positive. However, there are brief negative spikes between October 10 and 12, indicating short-term bearish pressure.
Despite these fluctuations in funding rates, ETH price trended downward overall, in line with periods of negative funding rates and showing that short-term bearish pressure contributed to the decline.
The funding rate has stabilized near zero, indicating a balanced market between long and short positions. Although small positive peaks persist, they have not translated into strong upward price momentum, underscoring cautious or neutral sentiment.
Ethereum price faces downside risk as it tests the USD 2,800 support
The daily price action of ETH/USDT shows a clear transition from consolidation to a possible downtrend between early 2025 and December 19, 2025. From February to April, ETH traded within a tight range and built strong support around the $2,000 level.
During this phase, the price remained stable as buyers and sellers remained in equilibrium, creating a solid foundation for the subsequent increase.
In May, ETH broke out of this consolidation and moved higher, but quickly encountered resistance. The price action slowed and started moving sideways again, showing hesitation among traders and increasing selling pressure as buyers struggled to push the price higher.
Between June and September, ETH experienced a strong bullish rally that took the price to the $5,000 resistance area. However, momentum faded around this level and the chart formed a rounded top that peaked in early September.
The previous support within the uptrend failed, leading to a price drop. Although there were small recoveries, these were weak and failed to break previous highs, leaving the overall trend negative.
The RSI (14) indicator supports this view as it has fallen below the 50 level, indicating weakening buying momentum and a greater risk of further downturn.
Currently, ETH is trading around $2,957, just below a small resistance area. If the key support near $2,800 breaks, ETH could continue to decline and retest the previous major support zone around $1,000-$1,200.
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