The cryptocurrency market remains under pressure on Monday, with Bitcoin (BTC) and Ethereum (ETH) extending their losses from the previous week as investors reassess the outlook for US monetary policy and cryptocurrency regulation.
Risk appetite has weakened following the Democratic Party’s victories in both chambers of Congress during last week’s US midterm elections.
The political shift has introduced fresh uncertainty over the future of crypto asset regulation and artificial intelligence development.
Meanwhile, stronger-than-expected US employment figures have reinforced expectations that the Federal Reserve could raise interest rates at its December 9 meeting.
The increasingly cautious market environment has also triggered substantial withdrawals from cryptocurrency investment products, with Bitcoin and Ethereum Exchange-Traded Funds (ETFs) recording significant outflows.
As institutional demand weakens and technical indicators deteriorate, major cryptocurrencies could face additional losses in the coming sessions.
US midterm election results and Fed rate hike expectations weigh on crypto
Political and macroeconomic developments are emerging as major sources of uncertainty for cryptocurrency investors.
The Democratic Party’s victories in both the House of Representatives and the Senate have raised questions about the direction of US cryptocurrency regulation.
Investors are particularly concerned about whether the new congressional balance could lead to changes in digital asset regulation and policies governing artificial intelligence development.
At the same time, persistent inflation concerns and a resilient US labor market have strengthened expectations of further monetary tightening.
The October US Nonfarm Payrolls (NFP) report showed that the economy added 165,000 jobs , while the unemployment rate stood at 4.1%.
The employment data suggest that the labor market remains sufficiently resilient to give the Federal Reserve room to maintain a restrictive monetary policy stance.
According to the CME FedWatch figures , traders assign approximately an 80% probability to a 25-basis-point interest rate increase at the December 9 meeting, which would bring the target range to 4.00%–4.25%.
Higher interest rates generally create a challenging environment for speculative investments, including cryptocurrencies, by increasing the appeal of interest-bearing assets and potentially reducing market liquidity.
For Ethereum, the prospect of tighter monetary conditions could continue limiting recovery attempts unless economic data or Fed policy expectations shift.
Crypto ETF outflows signal weakening institutional demand
Institutional investors have also become increasingly cautious, with major cryptocurrency ETFs recording substantial withdrawals last week.
US spot Ethereum ETFs recorded $365.28 million in net withdrawals last week , extending their losing streak to six consecutive weeks.
The prolonged outflow trend shows weakening institutional demand for ETH, particularly as the cryptocurrency struggles to maintain important technical support levels.
Persistent ETF outflows can weigh on market sentiment and contribute to selling pressure, especially when accompanied by declining prices and weak derivatives positioning.
Ethereum price outlook: ETH risks breaking below $2,000
Ethereum is also struggling to regain bullish momentum following another week of losses.
ETH trades slightly above $2,100 on Monday after declining approximately 6.50% last week, extending its broader corrective trend.
The coin remains below its 200-day EMA at $2,318 and the 50-day EMA at $2,370, indicating that sellers continue to control the market.
These moving averages now represent significant resistance levels that buyers must overcome to establish a meaningful recovery.
Ethereum’s momentum indicators also point to continued weakness. The daily RSI hovers near 33, approaching oversold territory and reflecting sustained selling pressure.
Meanwhile, the MACD continues moving deeper into negative territory, reinforcing the bearish outlook.
With the $2,199 support broken a few hours ago, Ethereum’s immediate support now lies at the psychological $2,000 level.
This area is particularly important because it sits close to the May 28 high around $1,967, creating a broader support zone where buyers could attempt to defend the price.
A decisive breakdown below $2,000 would weaken Ethereum’s technical structure further and increase the risk of additional losses.
Conversely, if ETH stabilizes and attracts renewed buying interest, the first significant resistance stands at $2,262, just above the previous support level.
An extended rally would allow the bulls to push the recovery towards the 200-day EMA at $2,319 and the 50-day EMA around $2,371.
However, reclaiming these moving averages would likely require stronger institutional demand and an improvement in broader cryptocurrency market sentiment.
Until then, Ethereum remains vulnerable to a retest of $2,000, particularly if ETF withdrawals continue and the Federal Reserve maintains a restrictive policy outlook.
AI disclosure: AI tools assisted with research and drafting of this piece. An Invezz editor reviewed the facts, sources and wording before publication. Any opinions or analysis are Invezz’s, not those of an automated system.
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