- Ethereum is set to mirror its previous performance, where it outpaced Bitcoin's gains by doubling in value within a few months, according to Steno Research analyst.
- The report highlighted that a Federal Reserve rate cut is expected to drive on-chain activity, fueling ETH's surge.
- Ethereum bulls may maintain buying pressure to extend the rally, provided ETH rebounds from a crucial support level.
Ethereum (ETH) climbed 3% on Friday after a recent Steno Research report suggested that the Federal Reserve's rate cut earlier in the week could ignite an ETH rally, mirroring its performance during the last altcoin season.
Daily Digest Market Movers: Ethereum Primed to Shine Once Again
Following the Federal Reserve's 50 basis point rate cut, Steno Research predicted that Ethereum could replicate its 2021 performance, when its value more than doubled against Bitcoin.
Ethereum has underperformed in the current bull cycle, gaining only about 8% compared to Bitcoin's 43% rise since the start of the year. The ETH/BTC pair, which tracks Ethereum's price against Bitcoin, hit a low earlier this week, last seen in April 2021.
However, analyst Mads Eberhardt believes Ethereum's outlook is set to improve. He predicts that the Fed's rate cut will boost on-chain activity, driving up ETH's value.
The report also pointed out that rapid growth in decentralized finance (DeFi), stablecoin issuance, and the non-fungible token (NFT) boom previously triggered an altcoin season, during which Ethereum outpaced Bitcoin in the last bull run. "Much like in 2021, when Ethereum more than doubled in value against Bitcoin in just a few months, it is now poised to shine again," Eberhardt wrote.
While it is still early to draw firm conclusions, ETH's recent price movement against Bitcoin aligns with the forecast. Bitcoin has dropped by 0.7%, while ETH has risen more than 3% in the past few hours.
Investors should still be cautious, as a rising Ethereum exchange reserve signals potential selling pressure, which could lead to a temporary price correction.
Meanwhile, Ethereum ETFs saw net inflows of $5.2 million on Thursday, with BlackRock's ETHA being the only issuer to record inflows, while all others posted zero flows.
Ethereum Could Rebound Off 100-Day SMA to Extend Rally
Ethereum is trading around $2,540 on Friday, up 3.3% for the day. In the past 24 hours, ETH has seen $25.3 million in liquidations, with $9.67 million in long positions and $15.63 million in short positions liquidated.
On the 4-hour chart, ETH is attempting a correction after nearing resistance at $2,595. To the downside, ETH could bounce off the 100-day Simple Moving Average (SMA) and retest the $2,595 resistance level.
A successful break above this resistance could push ETH toward the $2,817 level, which has held as resistance since the market crash on August 5. The $2,817 price was previously a key support level for over four months following ETH's decline from its yearly high in March.
However, if ETH falls below the 100-day SMA, it could find support around $2,395. A strong defense of this level by bulls could signal a rising bullish trend.
The 4-hour Relative Strength Index (RSI) and Stochastic momentum indicators are currently retreating from overbought levels of 70 and 80, respectively.
In the short term, ETH could rise to $2,572, triggering liquidations worth $39.68 million.
A daily candlestick close below $2,395 would invalidate this bullish outlook.
