Ethereum’s quick rebound positions ETH price for 100% rally

Ethereum’s native token, Ether (ETH), is undergoing a sharp bounce after dropping to its eight-month low on Aug. 5. Interestingly, this rebound shows similarities with the one in October 2023 that preceded a 168% price boom.

Has ETH price already bottomed?

As of Aug. 6, the ETH/USD pair showed signs of bullish reversal after rebounding from a support confluence comprising the lower trendline of its prevailing ascending channel pattern and the 200-week exponential moving average (200-week EMA; the blue wave).

Simultaneously, the bounce accompanies a rise in Ether’s weekly relative strength index (RSI) reading from 39.40, just over nine points above the oversold threshold. 

Ether technical indicators looked the same in October 2023, which—combined with supportive fundamentals such as the pre-halving rally and the launch of Bitcoin ETFs—helped the price rally toward the ascending channel's upper trendline. 

If the fractal plays out as intended, Ether has already bottomed out at its Aug. 5 low of around $2,128 and is now rallying toward the ascending channel’s upper trendline at around $4,560. When measured from the current price levels, this amounts to an over 100% rally by 2024. 

Rate cuts may further boost Ethereum’s upside

From a fundamental perspective, the anticipated US Federal Reserve rate cuts could increase demand for Ether as traders seek higher returns from riskier assets and move away from lower-yielding options like government bonds.

Bond traders believe the US economy is deteriorating so rapidly that the Fed may be forced to cut interest rates aggressively before their next meeting to prevent a recession. Concerns about high inflation have faded, replaced by fears of economic slowdown.

Traders now estimate a 60% chance of an emergency 0.25% rate cut within a week, according to Bloomberg. Moreover, CME data shows increasing probabilities of three rate cuts by 2024. 

The scenario is similar to March 2020, when the market sharply rebounded after the Fed’s intervention in response to the COVID-19 market crash.

"The final capitulation indeed as it hit that lowest point as similarly did in 2020 which signaled a bottom," noted market analyst Milkybull Crypto about the broader altcoin market, adding:

"I don't think this time is different."