Ethereum forms striking pattern – is there a big move around the corner?

Ethereum (ETH) has shown striking similarities to small US stocks in recent weeks. Analysts call the correlation “almost ghostly” and point to a possible joint breakout. But what makes the price of the cryptocurrency suddenly so sensitive to the broader stock market climate?

Technical signals indicate impending breakout

According to analysts from the investment platform Milk Road, the price of Ether is currently moving almost in line with the Russell 2000 Index, which consists of two thousand American small-cap companies. Both are traditionally highly dependent on interest rate expectations in the United States. And that is where movement seems to be coming.

CME futures markets put the probability of another 0.25 percent rate cut at the Oct. 29 Fed meeting at 95.7 percent. For December, the chance of a new reduction is more than 82 percent. “In a world where interest rate cuts are not just expected, but seem almost guaranteed, the fact that Ether generates returns plays an important role,” said Justin d’Anethan, head of partnerships at Arctic Digital.

According to analysts, both Ether and the Russell 2000 show a so-called cup-and-handle pattern. This is a bullish pattern that often precedes a new upward movement. The expectation is that both markets can benefit from this if interest rates fall further.

Ether corrects slightly after recent spike

According to Michaël van de Poppe, founder of MN Fund, the signals of recovery seem increasingly clear. According to him, the ETH/BTC trading pair has formed a bottom and is ready for a new upward phase. Meanwhile, gold prices, which recently peaked above $4,000 an ounce, appear to be on the verge of cooling off. “That could trigger the big risk-on movement,” says Van de Poppe.

Technical analyst Matt Hughes calls the current price development a possible sign of a new record. “As long as the price remains above $4,350, a new all-time high is close,” he says. Hughes has a price target of around $5,200.

At the time of writing, Ether is trading around $4,470, having fallen 4.4 percent in the past 24 hours.