Key Takeaways
Fed Cut Priced In: Ether’s surge above $4,700 is largely driven by expectations of a September Fed rate cut.
Analysts Warn of Risks: A surprise decision, rising inflation, or geopolitical shocks could stall the rally.
ETF Inflows Surge: Spot Ether ETFs saw a record $1.01 billion in daily inflows this week, fueling momentum.
Ether (ETH) is trading just 2.8% below its all-time high, but analysts warn the rally may be over-reliant on expectations that the US Federal Reserve will cut interest rates in September.
According to the CME FedWatch Tool, markets are pricing in a 95.8% probability of a September rate cut — a scenario some experts say leaves Ether “priced for perfection.”
“The whole market move is based on an assumption that the Fed will cut rates next month,” said Pav Hundal, lead analyst at Swyftx, in an interview with Cointelegraph. “That’s always when you need to be most careful.”
ETF Flows Fueling Ether’s Momentum
Spot Ether ETFs have played a major role in the rally. On Monday, Ether funds recorded their largest single-day inflows on record, totaling $1.01 billion across all products. Over the past week, ETH has surged 30%, and it’s up 74% over the past 12 months, per CoinMarketCap data.
Charles Edwards, founder of Capriole Investments and REF, remains bullish but cautions against complacency:
“What if inflation goes up, or there’s a major war breakout? Liquidity could get scared, capital freezes, and flows stop.”
Still, Edwards believes ETH could “quite easily double” in the coming months if Bitcoin (BTC) climbs into the $150K–$200K range, citing strong fundamentals and sustained institutional demand.
Economists Split on September Rate Cut
Not all economists believe a rate cut is guaranteed.
Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management, said Wednesday that the Fed could push back on market expectations if they feel conditions don’t warrant easing:
“If they think the market is wrong, they will go out there to talk down the market.”
Meanwhile, Jeff Schmid, president of the Federal Reserve Bank of Kansas City, signaled that the current policy stance remains appropriate given “inflation still stuck above our objective” and continued economic momentum.
The July US CPI came in at 2.7% year-over-year, unchanged from June and slightly below the 2.8% forecast — keeping the inflation debate alive ahead of the Fed’s September meeting.
Ether’s rally is being fueled by near-unanimous market expectations of a Fed rate cut, but any deviation from that scenario — whether from economic data, inflation surprises, or geopolitical shocks — could test ETH’s resilience just as it nears record highs.
