ETH Drops 8% to $2.7K Despite ERC-8004 Launch — Dead-Cat Bounce or Reversal Incoming?

Ethereum plummeted over 8% in the past 24 hours, falling to $2,765 despite the launch of ERC-8004, a new standard designed for trustless AI agent interactions. The broader crypto market shed nearly $100 billion as the Federal Reserve paused rate cuts amid persistent inflation concerns.

Bitcoin dropped more than 5% during the same period. Solana followed with similar losses. The CMC Altcoin Season Index now sits at 33, firmly in Bitcoin Season territory. Fear & Greed readings show the market at 38, signaling fear.

ETH dominance fell 0.33% in 24 hours as capital fled higher-risk assets. Negative funding rates across derivatives platforms suggest traders are paying premiums to short Ethereum positions.

Fed Rate Pause and Macro Pressures Drive ETH Decline

Federal Reserve Chairman Jerome Powell announced on January 28 that the central bank paused rate cuts after three consecutive reductions. Markets had already priced in this decision, but accompanying commentary raised alarm.

🚨 FOMC FED DECISION IS OUT:

THE FED HAS FINALLY PAUSED AFTER 3 CONSECUTIVE RATE CUTS.

THIS WAS SOMETHING THE MARKETS HAD ALREADY PRICED IN, BUT HERE'S WHAT'S ALARMING:

• THE FED THINKS THE JOB MARKET IS STARTING TO STABILISE, WHILE INFLATION CONCERNS ARE STILL HIGH.

• THE… pic.twitter.com/antms3BXm0

— Coinwaft (@coinwaft) January 29, 2026

The Fed cited a stabilizing job market while acknowledging elevated inflation concerns. Economic uncertainty remains too high for policymakers’ comfort. The 2% inflation target remains unmet.

President Trump’s announcement of new tariffs added to market unease. The dollar weakened while bond markets sold off. A potential government shutdown looms on the horizon.

These factors combined suggest the Fed will not cut rates in the near term. Risk assets including cryptocurrencies bore the brunt of this hawkish positioning.

Ethereum’s ERC-8004 Launch Fails to Boost Sentiment

The ERC-8004 standard deploys lightweight on-chain registries for identity, reputation, and validation. It uses NFTs for portable agent IDs, client feedback scores, and third-party proofs.

ERC-8004 is now live on mainnet.

5 months ago, we wrote the specs for the Trustless Agents standard.

Since then, over 10k agents registered on testnet.

Today, we’re releasing it on Ethereum Mainnet.

Welcome to the 8004 Genesis Month.

Here’s everything you need to know 👇 pic.twitter.com/R8gf2tCqII

— Davide Crapis (@DavideCrapis) January 29, 2026

Teams from Ethereum Foundation, MetaMask, Google, and Coinbase proposed the standard in August 2025. Over 10,000 testnet registrations occurred within five months of its introduction.

Projects including Minara AI, Virtuals Protocol, and Polygon are integrating the new standard. The development positions Ethereum as a neutral layer for an agent economy handling billions of autonomous transactions.

Despite this technological milestone, market sentiment remained firmly bearish. The innovation failed to counteract broader macroeconomic pressures weighing on crypto assets.

Meanwhile, Ethereum ETFs recorded mixed flows. Daily net inflows reached 7,816 ETH worth $21.92 million. However, weekly data showed outflows of 1,945 ETH valued at $5.46 million, according to Lookonchain data.

Jan 29 Update:#Bitcoin ETFs:
1D NetFlow: -37 $BTC(-$3.12M)🔴
7D NetFlow: -3,272 $BTC(-$276M)🔴#Ethereum ETFs:
1D NetFlow: +7,816 $ETH(-$21.92M)🟢
7D NetFlow: -1,945 $ETH(-$5.46M)🔴#Solana ETFs:
1D NetFlow: +41,404 $SOL(+$4.84M)🟢
7D NetFlow: +135,115 $SOL(+$15.81M)🟢 pic.twitter.com/naYVgoBOBY

— Lookonchain (@lookonchain) January 29, 2026

SEC Chair Paul Atkins stated that now represents the right time to open the $12.5 trillion 401(k) market to cryptocurrency investments. This regulatory development offers a potential long-term catalyst for institutional adoption.

🚨 JUST IN: SEC CHAIR ATKINS SAYS NOW IS THE RIGHT TIME TO OPEN THE $12.5T 401(K) MARKET TO CRYPTO. pic.twitter.com/hk8YUv6Fkc

— Coinwaft (@coinwaft) January 29, 2026

ETH Price Structure Breaks Down Amid Market Selloff

Ethereum’s market structure remains firmly bearish on the daily timeframe. The asset peaked near $4,800 in July-August 2025 before experiencing an impulsive decline through November and December.

Price currently trades below all three Bollinger Band reference points. The 20-day SMA at $3,083 serves as immediate resistance. Multiple rejection attempts at this level confirm seller dominance.

The lower Bollinger Band sits at $2,732, providing immediate support near current price levels. A breakdown below this threshold could accelerate selling toward $2,500-$2,550.

Fibonacci retracement analysis reveals ETH struggling at the 0.236 level near $2,966. Healthy recoveries typically reclaim the 0.382-0.5 range quickly. Current weakness at shallow retracement levels signals bear market conditions.

Volume analysis shows declining activity on rallies while sell-offs generate explosive spikes. This pattern represents classic distribution behavior. No sustained accumulation appears visible on the chart.

The Vortex Indicator shows VI+ at 1.1942 against VI- at 0.7203, suggesting short-term bullish pressure. However, historical context reveals these signals have repeatedly failed during the downtrend.

Key resistance stands at $3,083-$3,120 where the daily 20-SMA and mid-Bollinger Band converge. Bulls must reclaim $3,600 to flip the broader trend positive.

Support levels include $2,730 at the lower Bollinger Band and $2,500-$2,550 at historical accumulation zones. A break below $2,400 could trigger capitulation toward the $2,000 psychological floor.

The current price trajectory leans bearish. Technical indicators suggest this represents a counter-trend bounce rather than a genuine reversal. A sustained move above the Altcoin Season Index level of 50 would signal returning risk appetite.