Ether Price May Wobble If Fed Doesn’t Cut Rates: Analysts

Ether’s recent rally to over $4,700 is being largely propped up by expectations of a US federal rate cut in September, which could prove disastrous if it doesn’t eventuate, crypto analysts warn.

“The main issue right now is that the whole market move is based on an assumption that the Fed will give the market a rate cut next month,” Swyftx lead analyst Pav Hundal told Cointelegraph on Thursday, as Ether (ETH) continues to trade at only 2.80% below its 2021 all-time high, according to CoinMarketCap data.

Market participants are expecting a 95.8% chance the Fed will cut rates in September, according to the CME Watch Tool. 

Ether “priced for perfection”

“It looks like we’re priced for perfection, and that’s always when you need to be most careful,” Hundal added, pointing to the mounting Ether ETF flows and steady funding rates. 

On Monday, spot Ether ETFs recorded their biggest day of net inflows ever, with flows across all funds totalling $1.01 billion. Over the past seven days alone, the asset has surged 30%.

Capriole Investments founder and REF founder Charles Edwards told Cointelegraph he is highly bullish on Ether and expects its price to go higher, but agrees an unexpected move from the Fed could have an impact:

“What if the Fed, what if something happens, inflation goes up, or, you know, some unknown changes, and they decide not to cut or this, you know, or there’s a major war breakout, again.”

Edwards explains that it may “cause liquidity to get scared where capital just kind of freezes up and flows stop.”

While Edwards won’t “rule out anything,” he says he remains bullish as long as institutional demand exceeds Bitcoin’s (BTC) and ETH’s supply. “Like there’s only one way price can go, to be honest,” he said. 

“I’m open-minded to all outcomes, but right now, I see it going a lot higher,” Edwards said.

Edwards said Ether could “probably quite easily double” in the coming months if Bitcoin climbs between $150,000 and $200,000.

“It can definitely see significant appreciation, especially given the backdrop of strong fundamentals,” he said.

Not all economists are convinced of a rate cut in September

While market participants are tipping for a rate cut in September, not all economists are convinced that this is a done deal.

On Wednesday, Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management, said, “The biggest thing to…