Ether on the Edge: Betting on a September Fed Rate Cut Could Be a Risky Game

The recent surge in Ether’s price, climbing above $4,700 in recent days, is raising concerns among analysts that investors are relying too heavily on a single outcome – a Federal Reserve rate cut in September. If that doesn’t happen, the consequences for the market could be painful.

Betting on “Perfection” According to Pav Hundal, Chief Analyst at Swyftx, the current rise in Ether is largely driven by the belief that the Fed will cut rates next month. Data from the CME Watch Tool even shows the market assigning a 95.8% probability to this move. Ether is currently trading just 2.80% below its all-time high from 2021. “It seems we’re priced for perfection, and that’s always the time to be most cautious,” Hundal warns, pointing to massive capital inflows into spot Ether ETFs, which on Monday recorded a record daily inflow of $1.01 billion. Over the past week alone, Ether has gained 30%.

What if the Fed Surprises in the Opposite Direction? Charles Edwards, founder of Capriole Investments, remains optimistic about Ether but warns of unexpected events: “What if inflation rises again, or a major war breaks out, and the Fed decides not to cut rates?” Such a scenario, he says, could cause liquidity to freeze, capital flows to stop, and markets to stall. Still, he believes that as long as institutional demand for Ether exceeds supply, the price has only one direction – up. Edwards estimates that if Bitcoin rises to $150,000–$200,000, Ether could easily double in the coming months.

Diverging Views Among Economists Not all experts see a September rate cut as a certainty. Ellen Zentner of Morgan Stanley warns that the Fed may actively work to “cool down” overly optimistic market expectations. Similarly, Jeff Schmid, President of the Federal Reserve Bank of Kansas City, emphasized that he considers the current interest rate appropriate, and with inflation still above target and the economy showing strong momentum, he prefers to maintain a slightly restrictive monetary policy.

Inflation Holds Steady July CPI data showed U.S. inflation at 2.7% year-over-year, the same as in June and slightly below the 2.8% forecast. While this confirms a slowdown in price growth, it doesn’t provide a clear case for an immediate Fed intervention.

💡 Bottom line: The Ether market is in a phase of extreme expectations. If the Fed does cut rates in September, another strong rally could follow. If not, investors may be in for a harsh wake-up call.

#Ethereum , #ETH , #CryptoMarket , #Inflation , #blockchain

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