Ethereum has showcased a noteworthy correlation with small-cap stocks, which are notably sensitive to changes in interest rates. Analysts suggest that both assets might experience upward movement, especially with several interest rate cuts on the horizon.
Analysts from Milk Road, a macro investment outlet, noted an almost eerie correlation between Ether (ETH) and the Russell 2000 Index, which includes small-cap equities.
Both assets are highly reactive to interest rates. Given the potential for up to four rate cuts, analysts expect them to rise in unison.
The Russell 2000 Index tracks 2,000 U.S. public companies with lower market capitalizations, serving as a benchmark for U.S. economic performance.
Current predictions from CME futures markets indicate a 95.7% likelihood of another 0.25% rate cut by the Federal Reserve during its meeting on October 29, along with an 82.2% chance of a subsequent cut in December.
Unlike Bitcoin, Ether produces yield, which becomes crucial in a landscape where rate cuts are both anticipated and nearly assured, as mentioned by Justin d’Anethan, head of partnerships at Arctic Digital.
Source: Milk Road Macro
ETH and the Russell 2000 are also forming a bullish continuation pattern known as the cup-and-handle, suggesting a period of consolidation followed by a breakout.
Rotation Into Risk Assets
Michaël van de Poppe, founder of MN Fund, mentioned two key reasons for expecting ETH prices to hit new highs soon. Firstly, the ETH/BTC trading pair appears to be rebounding after a normal correction. Secondly, gold has reached an extraordinarily high level of over $4,000 per ounce, implying that it might decrease at some point, triggering increased investment in risk assets.
“If central banks globally adopt easing policies, there’s a strong rationale for capital to flow into risk assets that show potential for growth, and ETH fits that profile,” stated d’Anethan.
New Ether Price Peak Approaching
Matt Hughes, a chart analyst, observed that “ETH seems ready to break into all-time high territory, particularly as it establishes stability above the $4,350 mark.”
“As long as that zone continues to hold as support, ATHs aren’t too far away.”
Hughes has identified a target of $5,200 for the next upward movement in Ether, while analyst Poseidon predicted a peak cycle price of $8,500. At the time of reporting, Ether was trading down 6% at $4,430, nearing a crucial support level of around $4,400.
