Recently, Ethereum has shown strong upward momentum driven by the dual factors of increasing expectations for Federal Reserve rate cuts and improvements in its fundamentals, while the expectation of the implementation of rate cut policies further strengthens market optimism. The following analysis will cover four dimensions: technical, capital, fundamental, and the impact of rate cuts.

I. Technical Analysis: Breaking Historical Highs, Caution for Overbought Pullbacks

  1. Price Trends and Key Levels
    After Powell signaled dovish sentiments at the Jackson Hole meeting on August 22, Ethereum's price skyrocketed from $4,300 to $4,840, a nearly 14% increase. On August 24, it broke the historical high of $4,888, and further exceeded $4,900 on August 25, reaching a new high of $4,956. The current price is oscillating in the $4,800-$4,500 range, with short-term support at $4,500 (the former resistance turned support); if it fails, it may retest $4,300; resistance is at $5,000, and if broke, the target will point to $5,300.

  2. Technical Indicators and Market Sentiment

    • Overbought Signals Emerge: The 4-hour RSI has exceeded 70, entering the overbought zone, and the MACD momentum bars are shortening, indicating weakened upward momentum, necessitating caution for short-term pullbacks.

    • Institutional Funding Support: Spot ETF funds have seen continuous net inflows for 14 weeks, with institutions like BlackRock and Fidelity seeing single-day inflows exceeding $140 million, driving prices past key resistance levels.

    • Contract Risk Warning: Over $450 million was liquidated across the network within 24 hours before and after the August 22 meeting, with a high proportion of long positions, indicating ongoing market divergence.

II. Capital Markets: Institutional Accumulation and Corporate Treasury Expansion Provide Support

  1. Continuous Inflow of Spot ETF Funds
    Nine Ethereum spot ETFs listed in the U.S. saw a single-day inflow of over $1 billion on August 11, with BlackRock's ETHA seeing an inflow of $640 million, setting a record. As of August, the cumulative net inflow exceeded $6.7 billion, far surpassing Bitcoin ETFs, becoming a core driving force behind price increases.

  2. Significant Accumulation by Corporate Treasuries
    Listed company BitMine Immersion Technologies has launched an Ethereum treasury plan, accumulating 135,000 ETH in a single week, bringing total holdings to over 1.3 million ETH, aiming to hold 5% of the total global Ethereum supply. Similar long-term allocation demands from institutions significantly reduce market supply, enhancing price elasticity.

  3. Stablecoins and Capital Flows
    Rumors of the U.S. Treasury discussing with stablecoin issuers about purchasing short-term U.S. Treasuries could introduce long-term liquidity into the crypto market. Mainstream stablecoins like USDT and USDC are flowing into cryptocurrency exchanges, pushing on-chain transfer volume on Ethereum to see a month-on-month increase of 22%.

III. Fundamentals: Technical Upgrades and Ecosystem Expansion Solidify Long-term Value

  1. Pectra Upgrade to be Implemented in Phases
    Ethereum plans to launch the Pectra upgrade on April 8, 2025, which includes 11 EIP proposals focusing on optimizing the staking mechanism (increasing the validator staking cap from 32 ETH to 2048 ETH) and Layer2 scalability (doubling the block blob capacity). After the upgrade, Layer2 transaction costs are expected to drop by another 30%, pushing DeFi TVL from $47 billion towards $60 billion.

  2. Prosperity of DeFi and Layer2 Ecosystem

    • DeFi Growth: Uniswap's Layer2 solution Unichain launched its mainnet, processing over 50 million transactions, driving a 12% month-on-month increase in DeFi TVL.

    • NFT Market Recovery: Weekly sales of Ethereum NFTs surged 76% by the end of 2024, with leading series like Azuki seeing a 226% increase in sales, enhancing network effects through increased on-chain activity.

  3. RWA and Institutional Penetration
    Ethereum occupies an 81% market share in the tokenization of real-world assets (RWA), with locked asset volumes reaching $14.9 billion, covering areas like real estate and carbon credits. Institutions are accelerating entry through ETFs and custodial services, with asset management giants like BlackRock and Fidelity doubling their crypto department headcounts.

IV. Impact of Rate Cuts: Easing Liquidity Expectations Strengthen Market Sentiment

  1. Market Transmission of Rate Cut Expectations
    The probability of a 25 basis point rate cut by the Federal Reserve in September has risen to 90%. CME FedWatch data shows that the market is betting on three cumulative rate cuts by 2025, with the terminal rate potentially falling below 3.5%. Rate cuts attract capital to risk assets like cryptocurrencies by lowering borrowing costs and weakening the dollar's appeal. Historical data shows that Bitcoin surged over 500% within a year after the Fed's rate cuts in 2020, with current conditions being similar.

  2. Dual Benefits for Ethereum

    • Direct Liquidity Injection: During the rate cut cycle, traditional capital flows into the crypto market via ETFs, futures, etc. Ethereum, being the second-largest by market cap and having a mature ecosystem, becomes the preferred choice for institutional allocation.

    • Long-term Narrative Strengthening: Rate cuts are typically accompanied by economic downturn pressures, highlighting Ethereum's safe-haven attributes as 'Web3 infrastructure.' Combined with growth in DeFi and RWA, it may attract more safe-haven funds.

  3. Risk Warning and Expectation Management

    • Buy Expectations, Sell Facts: If the rate cut in September is less than expected (e.g., only 12.5 basis points), it may trigger short-term sell-offs, with Bitcoin potentially testing $108,000 and Ethereum testing the $4,300 support.

    • Policy Uncertainty: If the Federal Reserve shifts its policy framework to a 'flexible inflation targeting' approach, and if Powell emphasizes at the September FOMC meeting that 'a rate cut does not signal the start of a loosening cycle,' it could lead to a rebound in U.S. Treasury yields and a short-term strengthening of the dollar.

V. Operational Suggestions: Balancing Short-term Speculation and Long-term Positioning

  1. Short-term Traders

    • Long/Short Strategy: Sell high and buy low in the $4,800-$4,900 range, chase longs if it breaks $4,980, targeting $5,000.

    • Hedging Tools: Buy put options with a strike price of $4,600 to hedge against overbought pullback risks; or allocate to gold ETFs (e.g., 518880) to hedge tail risks.

  2. Medium to Long-term Investors

    • Holding Structure: 60% position in ETH, 20% allocated to SOL, ARB, and other Layer2 tokens, and 20% cash for adding positions during pullbacks.

    • Upgrade Arbitrage: Focus on staking rewards before the Pectra upgrade, staking ETH through protocols like Lido and Rocket Pool, with annualized returns of up to 4.8%.

    • Cross-chain Allocation: Move 10% of funds to the Bitcoin ecosystem, participating in hybrid Layer2 projects like PlutoChain to capture cross-chain interoperability benefits.

Summary

Recently, Ethereum has reached new all-time highs under the resonance of rate cut expectations, institutional accumulation, and technological upgrades. In the short term, caution is warranted for overbought pullbacks, but the medium to long-term upward trend is clear. Investors should focus on the rate cut magnitude at the September FOMC meeting, the progress of the Pectra upgrade testnet, and changes in holdings of on-chain whale addresses. It is recommended to adopt a 'core position + swing trading' strategy to balance short-term volatility with long-term value growth.