Analysts say both assets could move higher with as many as four consecutive Federal Reserve cuts potentially on the horizon.
Ethereum News
Ethereum has been highly correlated with small-cap equities, which are sensitive to interest rates. Analysts say both assets could move higher with as many as four consecutive Federal Reserve cuts potentially on the horizon.
Macro investor outlet Milk Road noted Tuesday that there is an “almost spooky” correlation between Ethereum and the Russell 2000 Index, which comprises small-cap equities. The Russell 2000 tracks 2,000 U.S. public companies with small market capitalizations and is widely used to gauge economic performance.
Both assets are highly sensitive to interest rates. CME futures markets currently predict a 95.7% chance of another 0.25% rate cut by the Federal Reserve at its Oct. 29 meeting and an 82.2% probability of a further cut in December.
Justin d'Anethan, head of partnerships at crypto private markets firm Arctic Digital, explained that, unlike Bitcoin, Ethereum generates yield. That matters significantly in a world where rate cuts are not just priced in but practically guaranteed, he told the media.
Ethereum and the Russell 2000 also appear to show a cup-and-handle pattern, a bullish continuation pattern that marks a consolidation period followed by a breakout. The technical formation suggests potential upward movement for both asset classes.
MN Fund founder Michaël van de Poppe stated Wednesday that there are two reasons why the price of Ethereum will soon reach a new all-time high. First, the ETH/BTC trading pair “looks bottomed out” and is ready for a new leg upward after a relatively normal correction.
Second, gold is “insanely parabolic” after hitting a peak of over $4,000 per ounce. Van de Poppe expects gold to come down at some point, triggering what he calls “the big risk-on switch” toward alternative assets.
D'Anethan added that if central banks globally move into easing mode, there is a strong case for capital rotating into risk assets with upside. Ethereum fits that profile given its yield-generating characteristics and infrastructure role in digital finance.
Chart analyst Matt Hughes commented Wednesday that Ethereum looks primed to break into all-time high territory as it finds stability above the $4,350 level. He noted that as long as that zone continues to hold as support, new records are not too far away.
Hughes targeted $5,200 as the next leg up for Ethereum, while analyst Poseidon projected the cycle top would reach $8,500. At the time of reporting, Ethereum had corrected and was trading down 6% on the day at $4,430, approaching a key support zone near $4,400.
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