Over the past several months, Ethereum (ETH) has moved almost in sync with the Russell 2000, an index tracking small-cap American companies. The two have displayed a level of correlation rarely seen between crypto and equities. Analysts at Milk Road Macro called the connection “eerily precise,” arguing that both assets could soon respond positively to a more accommodative monetary environment.

Interest Rate Cuts Could Trigger the Next Move

Markets are preparing for what many now see as a near certainty: additional Federal Reserve rate cuts. Data from CME futures indicates traders are pricing in a 96% probability of a 25-basis-point cut in late October and an 82% chance of another in December.

These expectations have stirred optimism across risk assets, particularly for Ethereum, which analysts say has more exposure to yield-driven demand than Bitcoin. Justin d’Anethan, head of partnerships at Arctic Digital, believes that dynamic will be key:

“Ethereum isn’t just a speculative asset – it generates yield. When interest rates drop, that yield becomes even more attractive,” he said.

The Broader Risk-On Shift

Macro trader Michaël van de Poppe thinks Ethereum’s breakout could come sooner than most expect. He points to the ETH/BTC pair, which has shown signs of bottoming after months of consolidation. At the same time, gold’s surge to record levels above $4,000 per ounce has prompted expectations of a pullback – an event that could shift capital from defensive holdings to growth-oriented assets like ETH.

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“If the global easing cycle continues, we’ll see a strong rotation into markets with upside potential,” van de Poppe said. “Ethereum fits that category perfectly.”

Technicals Point Toward Higher Targets

Chart watchers have also highlighted a potential cup-and-handle formation in Ethereum’s recent structure – a technical pattern typically signaling continuation of an uptrend after a pause.

Analyst Matt Hughes says Ethereum has been stabilizing above the $4,350–$4,400 area, a region that could serve as the final base before a push toward new highs. He places the next resistance zone near $5,200, while others, like the pseudonymous analyst Poseidon, are eyeing a cycle peak around $8,500.

Despite a modest 6% daily pullback to $4,430, the sentiment among traders remains broadly optimistic. If the Fed follows through with a series of cuts, Ethereum could emerge as one of the biggest beneficiaries of renewed liquidity – and perhaps the next major asset to break free from its historical ceiling.

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