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The FED made its first interest rate cut in September after a long break. While experts expect the FED to continue reducing interest rates, it was stated that these interest rate cuts will have a positive impact on the Ethereum (ETH) price.
Digital asset firm FalconX stated in a recent report that they expect the price of ETH to rise if the US interest rate cuts continue.
At this point, FalconX, who expects Ethereum staking returns to outstrip US interest rates next year and create new opportunities for investors, said that this change will make the Ethereum network more attractive for staking and could increase the price of Ethereum with increasing demand.
FalconX emphasized that interest rates will fall due to further rate cuts expected from the Fed in the next few quarters, and the yield gap between US interest rates and ETH staking yields, which currently stand at around 3.2%, will narrow.
Pointing out that US rates are expected to fall below 3.75% by March 2025, FalconX said, “ETH staking returns may become more competitive and attract more investors. This may increase prices.”
David Lawant, head of research at FalconX, said the following about Ethereum:
“We have yet to see how Ethereum price offers a profitable staking rate compared to fiat rates in a full-fledged crypto bull market.
The only time ETH staking rates were significantly above interest rates for a relatively long period was in late 2022, when it was struggling with the FTX disaster at the bottom of the bear market.
However, the current crypto bull market could create even higher staking rewards this time around. This could significantly increase the price.”
Ethereum, which has fallen 1.5% in the last 24 hours, continues to trade at $2,600 at the time of writing.
*This is not investment advice.