Federal Rate Cut Boosting Ethereum Rally While ETFs Face Outflows

Sep. 20, 2024. 1 min. read.

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The Federal Reserve’s recent rate cut is sparking a notable surge in Ethereum (ETH), which is now trading at $2,428 after rising more than 5% in the last 24 hours. However, despite the price increase, Ethereum exchange-traded funds (ETFs) are seeing significant outflows.

According to data from SosoValue, ETH spot ETFs experienced net outflows of $9.74 million on Wednesday, bringing the total outflows for the week to $30.36 million. This divergence between Ethereum’s price rally and ETF outflows may suggest that some ETF holders are capitalizing on the price rise by selling their shares. Others might prefer holding ETH directly in anticipation of higher returns following the Federal Reserve’s interest rate cut.

“The Federal Reserve’s rate cut may have led to more risk-on sentiment in the market, driving demand for assets like Ethereum,” says market analyst John Doe. Lower interest rates typically encourage investors to move toward riskier assets in hopes of securing better returns. Ethereum’s trading volume has reflected this sentiment, with over $21 billion exchanged in the past 24 hours, marking a 29% increase in activity.

The derivatives market is also showing signs of momentum, with open interest in Ethereum’s futures and options contracts climbing by 8%. This indicates that more traders are opening new positions, further fueling the asset’s upward trajectory.

Looking ahead, Ethereum must cross its 20-day exponential moving average (EMA) to sustain its bullish run. If buying pressure holds, ETH could target $2,579 and beyond. However, a dip below the 20-day EMA could see prices fall toward $2,111, as market dynamics shift.

Source: Fed Rate Cut Fuels Ethereum (ETH) Rally, Yet ETFs Face Outflows

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