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Cowen warns of Ethereum devaluation amid Fed rate cuts

Cowen warns of Ethereum devaluation amid Fed rate cuts

GrafaGrafa2024/10/24 02:30
By:Liezl Gambe

Crypto strategist Benjamin Cowen has highlighted the potential risk of Ethereum (CRYPTO:ETH) facing devaluation as the Federal Reserve begins a cycle of interest rate cuts. 

Drawing comparisons to market trends in 2019, Cowen indicated that ETH might follow a similar pattern, potentially dropping to the lower boundary of its logarithmic regression band. 

According to Cowen, the logarithmic regression band helps track an asset’s real value without the impact of speculative bubbles. 

He noted that during previous periods of Fed rate cuts, the ETH/USD pair fell below this trend line, suggesting a similar outcome could occur now. 

“The reason I compare 2024 to 2019 is that during the rate hike cycle, looking only at interest rates, the ETH/USD fell to the lower logarithmic regression trend line when the Fed started cutting. The same thing is happening again,” Cowen explained. 

Cowen pointed out that in 2019, the ETH/BTC pair reached its lowest point before the ETH/USD pair, suggesting that while ETH/BTC might have hit its bottom in September 2024, the ETH/USD pair could face further declines. 

Cowen’s analysis underscores that Ethereum’s future performance is closely tied to broader market conditions and the Fed’s monetary policy decisions. 

He advised market participants to consider these dynamics when making investment decisions, as a downturn in ETH could potentially signal losses for other altcoins. 

The strategist’s warning comes amid ongoing discussions in the crypto market about the implications of Fed policies on digital assets. 

Investors are advised to monitor these developments and factor in current forecasts to make informed choices about their holdings.

At the time of reporting, the Ethereum price was $2,549.07.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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