Ethereum’s native token, Ether (ETH), is on a tear after hitting an eight-month low on August 5. Interestingly, this bounce is similar to the one in October 2023 that preceded a 168% price surge.
Has ETH price already hit bottom?
As of August 6, ETH/USD showed signs of a bullish reversal after bouncing off the support confluence formed by the lower trendline of the dominant ascending channel pattern and the 200-week exponential moving average (200-week EMA, blue wave).
At the same time, the rebound was accompanied by a rise in Ethereum’s weekly Relative Strength Index (RSI) reading of 39.40, which is more than 9 points above the sell-off threshold.
Ethereum technical indicators looked the same in October 2023, as fundamental factors such as the pre-halving rally and the launch of a Bitcoin ETF combined to help the price rally towards the upper trendline of the ascending channel.
If the fractal plays out as intended, Ether has already bottomed out at the low of August 5th around $2,128 and is now rallying towards the upper trendline of the ascending channel around $4,560. Measured from current price levels, this would equate to a rally of over 100% by 2024.
Ethereum’s bullish momentum could be boosted by interest rate cuts
From a fundamental perspective, the expected Fed rate cut could boost demand for Ether as investors seek higher yields from riskier assets and move away from lower-yielding options like government bonds.
Bond traders believe the U.S. economy is deteriorating so quickly that the Fed may need to cut rates aggressively before its next meeting to prevent a recession. Concerns about high inflation have faded, replaced by fears of a recession.
According to Bloomberg, traders now estimate a 60% chance of an emergency 0.25% rate cut within the next week. Moreover, CME data shows an increasing chance of three rate cuts by 2024.
This scenario is similar to March 2020, when the Federal Reserve intervened in response to the COVID-19 market crash and markets rebounded sharply.
“The final capitulation has actually occurred as we reach a low point, similar to what we saw in 2020,” market analyst Milkybull Crypto said of the broader altcoin market, adding:
“I don’t think this time will be different.”
This article does not contain any investment advice or recommendations. All investment and trading moves involve risk, and readers should conduct their own research when making decisions.