Institutional cryptocurrency broker FalconX calls interest rate returns a strong factor in the Ethereum price recovery.
the broker says this is due to the recent Fed hike and network activity.
#Ethereum is already showing signs of recovery.
the past few months, some have argued that Ethereum (ETH) is on the verge of extinction. With the unexpected Dencun update, #ETH has lost its deflationary status, leading many to question the viability of owning the asset. These fears are reinforced by the fact that the asset is lagging behind market leaders such as bitcoin (BTC) and Solana (SOL).
However, experts believe that the fears are exaggerated, pointing to DeFi's dominance of ethereum and the expected growth of utility applications as a vector that could drive demand. Institutional #cryptocurrency broker FalconX recently added ETH to its list of supporters.
Double Effect.
Institutional cryptocurrency broker FalconX cited rate yields as a key factor in Ethereum's price recovery. David Lovant, head of research at FalconX, argues in a note on Friday, September 28, that ETH rate yields are likely to exceed those of traditional risk-free investments such as government bonds, which could attract investors looking for higher yields.
Mr. Rowant argues that this will happen due to a dual effect.
The first is the Federal Reserve's recent dovish stance, which has driven down yields on traditional risk-free investments.
On September 18, the Fed cut interest rates by 50 basis points for the first time in four years, signaling the possibility of another cut within a year. According to the CME's FedWatch tool, the probability of a rate cut from the current 4.75-5% to below 3.75% by March 2025 is more than 80%, and another 3.5% by June 2025. The probability of rates falling to 3.5% by June 2025 is 90%.
The second expected catalyst for FalconX is the rise in transaction fees, which is expected to increase rate yields.
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