Ethereum (ETH) dropped 3% on Friday, which seems a bit rude considering Tom Lee just delivered what should have been good news. The Fundstrat strategist thinks the Federal Reserve's December policy meeting could inject fresh life into risk markets, including crypto. But Ethereum apparently didn't get the memo.

Lee's Case for a December Rally

Lee's logic is pretty straightforward: the Fed is likely to cut rates in December, and that should benefit everything on the risk spectrum. He described it as a "monetary policy decision in December" that affects "both stocks and crypto because that's a risk-on measure."

He went further, saying "the odds favor a cut," and argued that lower rates "will help inject confidence… another reason to expect stocks and crypto to do well into year-end."

The macro thesis makes sense. When the Fed eases financial conditions, high-beta assets tend to catch a bid. That includes Bitcoin (BTC), Ethereum, and equity sectors tied to digital markets. Cheaper money typically flows toward riskier corners of the market, and crypto definitely qualifies.

Ethereum's Technical Picture Looks Rough

Unfortunately for Lee's bullish outlook, Ethereum's chart is telling a different story. The token's daily structure has been deteriorating since mid-October, and it's now trading below its 20-, 50-, and 100-day exponential moving averages. That's not the setup you want heading into what's supposed to be a year-end rally.

There's a stacked resistance zone between $3,564 and $3,843 that's acted as a firm ceiling. Each time ETH has retested the descending trendline from its September peak, sellers have shown up with force. The most recent rejection came from the $3,360–$3,400 region, demonstrating limited appetite from buyers.

The market continues to treat every bounce as an opportunity to exit positions rather than add exposure. Ethereum recently lost the 0.236 Fibonacci level at $3,346, which adds pressure and pushes the token toward the $3,060–$3,120 demand zone. That area has repeatedly served as the final support layer in previous drawdowns, making it the line in the sand traders are watching closely.

Momentum and Seasonality Both Point Down

The momentum indicators aren't helping matters. The RSI remains anchored near 34 with no bullish divergence forming, which suggests selling pressure hasn't exhausted itself yet.

Then there's the seasonality issue. November is often a positive month for Ethereum, but this year is shaping up to resemble one of its deeper historical November drawdowns. Worse, December carries a negative median return for ETH, meaning Ethereum is heading into a historically weak period with an already deteriorating technical structure. Not exactly the backdrop for a year-end moonshot.

The Levels That Matter Going Forward

If Ethereum loses the $3,060–$3,120 support zone, things could get uncomfortable quickly. The next liquidity pocket sits between $2,800 and $2,600, an area that aligns with a full retracement of the previous rally and contains several volume-weighted nodes that typically attract high-time-frame buyers looking for value.

For bulls to regain control, ETH needs to reclaim $3,346, break through the descending trendline, and close above the $3,650–$3,820 region where all the major EMAs converge. That's a tall order given current momentum, and without that shift, traders are bracing for continued downside pressure.

So while Tom Lee's macro call might prove correct over time, Ethereum traders are dealing with a messier reality right now. The Fed might cut rates in December, but first ETH has to survive getting there.