Following the Federal Reserve's decision to reduce interest rates by 50 basis points (bps), Ethereum (ETH) has started to experience renewed buying pressure. On Wednesday, the cryptocurrency saw a price surge to over $2,330 as the market responded to the rate cut. However, despite the recovery, Ethereum’s performance remains weak compared to Bitcoin, leaving ETH holders divided.

- Ethereum's Market Dynamics Post-Rate Cut:

The Fed’s interest rate reduction, bringing rates down to 4.75%-5%, is the first such cut since March 2020. Historically, rate cuts tend to boost investor sentiment, and Ethereum might benefit from increased purchasing activity in the coming weeks. This period has also proven to be a favorable time for the broader cryptocurrency market, with many predicting further growth.

Large Ethereum holders, particularly those with more than 100,000 ETH, have continued holding their assets, with many staking their coins in yield-bearing DeFi protocols. Meanwhile, mid-tier holders (10,000-100,000 ETH) have shown mild accumulation, signaling cautious optimism.

- Ethereum ETFs and Price Resistance:

In contrast to the positive momentum in ETH prices, U.S. spot Ethereum ETFs saw outflows of $15.1 million on September 17, driven largely by a $17.9 million loss from Grayscale's ETHE. However, its Ethereum Mini Trust gained $2.8 million, reflecting a mixed sentiment among institutional investors.

Currently, Ethereum is trading in a rectangular channel between $2,395 and $2,207. After facing rejection at $2,395 earlier in the week, ETH is now attempting to break through this key resistance level. If successful, analysts believe the next price target for Ethereum could be $2,817, with the potential to climb as high as $3,237.

- Downside Risks for Ethereum:

On the downside, if Ethereum fails to hold the $2,207 support level, it could fall below $2,111. A daily close below this threshold could invalidate the current bullish outlook, leading to significant losses for investors.

As the market digests the impact of the Fed's decision, Ethereum's next moves will be crucial for determining whether it can break through resistance or suffer another decline.

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