Ethereum shows 'synchronization' with U.S. small-cap stocks... Breakout potential rises ahead of rate cuts

Ethereum (ETH) has shown a high correlation with the U.S. small-cap stock index, and analysts say the Fed's potential further rate cuts could lead to simultaneous gains for both assets.

On the 8th (local time), Cointelegraph reported that a Milk Road market analyst said, "The movements of Ethereum and the Russell 2000 (Russell 2000) index are almost 'eerie' in their similarity," and added, "If up to four consecutive rate cuts are implemented in the future, they are likely to rise together." The Russell 2000 index tracks the stock prices of 2,000 U.S.-listed companies with small market capitalizations and is used as an indicator of the overall health of the U.S. economy.

According to the CME futures market, the probability of a 0.25%-point additional cut in the benchmark rate at the Federal Reserve (Fed) meeting scheduled for October 29 is 95.7%, and the chance of another cut at the December meeting is 82.2%.

Justin d'Anethan, head of partnerships at Arctic Digital, explained, "Unlike Bitcoin (BTC), it is important that Ethereum can generate yield," adding, "In an environment where rate cuts are effectively a foregone conclusion, this characteristic increases the asset's appeal."