Ethereum’spricemovementsshowastrongcorrelationwiththeU.S.Treasurybondyields.
FederalReserveratecutshavehistoricallydrivensignificantupwardmovementinEthereum.
RisingTreasuryyieldsoftensignaladownwardtrendforEthereumasriskappetiteshifts.
ItwasestablishedthattheETHpricemovementsarecloselyrelatedtothemovementsintheU.S.Treasuryyields,animportanteconomicfactor.Cryptocurrency’srelationshiptoothermarketshasemergedclearly,especiallyinregardtodecisionsmadebytheFederalReserve.TreasuryyieldshaverecentlyimpactedEthereumasfluctuationsininvestor’sperceptionofbondmarketshavereflectedfluctuationsinthecryptocurrencymarket.
There\'sahugecorrelationbetween$ETHandYieldsonTreasurybonds.
Theinitialratecutof50bps=11%jumpon$ETH.
Theswapinsentiment+upwardstickonYields=downwardsmoveon$ETH.
Expectingtosee#AltcoinbullseasonstartfromthenextFEDmeetingratecut.pic.twitter.com/h0DGq05IGX
—MichaëlvandePoppe(@CryptoMichNL)October18,2024
When,forthefirsttime,theFederalReservereduceditsinterestrateby50basispointsEthereumsurged11%.Suchhighvolatilityindicatesthatriskierinvestmentssuchascryptocurrenciesmayattractmoreinvestorattentionwhentheinterestratesdecline.
Overall,ratecutsreducethereturnsforessentiallyrisk-freesavingsproductssuchasUSTreasuries,andthusmakeinvestmentsinotherformssuchascryptoactive.Thedatafurthersuggestthatdigitalcurrenciesarebecomingmoreresponsivetoindicatorspreviouslyconsideredapplicabletotraditionalassets.
ShiftingSentimentandYieldsDriveMarketMovements
OntheotherhandasyieldsonTreasurybondsincreaseandinvestors’outlookchangesEthereumhasfollowedsuitwithmirrormovements.Ifyieldsrisealittlefurtherthentheimprovingconditionintheconventionalmoneymarketsreducestheriskdemand.
ThishasbeenatypicalscenariowithEthereumespeciallywhenTreasuryyieldsbegantoembarkonthedownwardstrend.Whenyieldsgoup,theymayshifttheirpooltobetteryieldinginvestments,andthushavelowerdemandforsomeexoticinvestmentssuchasEthereum.
ExpectationsforAltcoinMarketFollowingFutureRateCuts
MarketparticipantsarenowcloselywaitingontheFederalReserveforfurtheractionsbecausemanybelievethatanotherratecutcancontinuethepositiveoutlookofcryptocurrencies.Altcointraders,inparticular,areconvincedthatanothercutinrateswillmeanthebeginningofamajoraltcoins’bullrun.ItisestablishedthatdecisionsmadearoundmonetarypolicyholdadirectinfluenceovertherespectivecryptocurrencymarketandmoreimportantlytheEthereummarket.
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