Ethereum tests the $2,431 support as hot US inflation pressures crypto market

Key takeaways

Ethereum fell 0.7% as annual US producer inflation accelerated to 5.4%.
Polymarket traders assigned a 62% probability to a rate hike at the next Fed meeting.
ETH is testing support at $2,431 and $2,405, with resistance near $2,545.

Ethereum (ETH) traded 0.7% lower on Friday as it attempted to recover from selling pressure triggered by stronger US producer inflation data.

The hotter annual inflation reading increased expectations of tighter Federal Reserve policy, creating a challenging environment for risk assets. Although Ethereum remains above its major moving averages, retail selling, hesitant derivatives traders, and slowing institutional demand could limit its near-term recovery.

US producer inflation rises to 5.4%

The US Producer Price Index for final demand increased 0.4% in August, matching market expectations after a revised 0.1% gain in July.

On an annual basis, producer inflation accelerated to 5.4% from 4.8%. Energy prices contributed significantly to the increase, rising 4.2% amid higher oil prices. Core producer prices, which exclude food and energy, also advanced 0.4% during the month.

The data preceded Friday’s Consumer Price Index report, another potential catalyst for expectations surrounding the Federal Reserve’s September 15–16 meeting.

Prediction-market data from Polymarket showed traders assigning a 62% probability to an interest-rate increase at the Fed’s next meeting. The estimated likelihood of a hike by October stood at 71%.

Markets also increasingly expect Fed Chair Kevin Warsh to begin his tenure with a rate increase, marking a sharp shift from earlier policy expectations.

Higher rates could pressure Ethereum by tightening financial conditions and increasing the appeal of interest-bearing assets. They could also discourage the leveraged trading and speculative activity that often support cryptocurrency rallies.

Despite the difficult macroeconomic backdrop, US spot Ethereum exchange-traded funds registered $34.75 million in net inflows on Wednesday.

The positive result offset the $24 million withdrawn on Tuesday and indicated that some institutional investors continued accumulating ETH during its two-week consolidation.

However, weekly ETF demand has slowed. The products attracted $218.4 million last week, down sharply from the yearly high of $824 million recorded during the preceding week.

This slowdown suggests institutional interest remains positive but has lost momentum.

Retail investors sold a combined 307,000 ETH last week, significantly exceeding the 82,000 ETH accumulated by whales.

The imbalance shows that smaller holders have taken a more cautious approach following Ethereum’s recovery in late August. Persistent retail distribution could increase the available supply and limit attempts to push the price higher.

Ethereum’s price has also risen faster than futures open interest. The divergence suggests leveraged long traders remain reluctant to commit substantial fresh capital to the recovery.

Ethereum tests 20-day EMA and $2,431 support

Ethereum is testing horizontal support near $2,431 and its 20-day exponential moving average around $2,405.

Despite the pullback, ETH remains comfortably above its 50-, 100-, and 200-day EMAs, which are clustered between approximately $2,223 and $2,256. This positioning keeps the broader uptrend intact.

The Relative Strength Index stands near 59, maintaining a modest bullish tilt while showing that momentum has cooled. The Stochastic Oscillator is also moving toward its midpoint, indicating moderation rather than a confirmed bearish reversal.

If Ethereum rebounds, its first major resistance sits near $2,545. A decisive close above this level could expose the next barriers at $2,626 and $2,787.

On the downside, losing $2,405 and $2,431 would shift attention to the moving-average support cluster between $2,223 and $2,256. Further support lies at $2,172, followed by the broader trend floors at $1,961 and $1,810.

A sequence of daily closes above the overhead resistance levels would restore stronger bullish momentum and reopen the path toward new local highs.