Interest in Ethereum-based investments grows after US interest rate cut
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At the current stage of market development, investors are most interested in investing in Ethereum futures. There has been an increase in demand for this type of investment, but the leverage still remains balanced with other assets.
Additionally, the price of the ETH token has surged over the past week, reaching a new resistance level. This has happened precisely as interest in ETH futures, a type of investment that has seen an increase in the number of contracts on exchanges, has increased.
Despite the positive signs, investors remain cautious. This is a reflection of the economic instability that is still affecting the United States. It is also a result of the uncertainty that hangs over the country as a result of the ongoing process to elect the country’s new president.
Ethereum Price Movement and Growth Projection
At least for a while, investors in the Ethereum network can breathe a sigh of relief. This is because the token has reacted after some time in decline, as has happened with other digital assets. The token’s movement indicates that in the last 15 days, the currency has appreciated by almost 13%.
The price resistance level is now close to $2,600. It is also important to note that the asset continues to rise, even with the current market instability. This indicates that the price of the ETH token may rise even further in the coming days.
The current market reaction, especially that of Ethereum, is also boosting other types of investments. This is the case of ETH futures, which are traded on stock exchanges and are currently experiencing increased demand.
Current ETH Futures Return Stability May Not Be Good in the Long Run
There are optimistic projections regarding investment in Ethereum futures. Experts point out that, currently, the return indicator is positive. However, long-term projections are still inconclusive.
Average premiums for this type of investment remained stable in August, hovering around 6%. This return is considered good and slightly higher than the rate considered neutral, which is usually 5%. However, traders still expected a bit more, given the long period of lower premiums.
In times of greater demand and high premiums, the return indicator can exceed 10%, which is exactly what happened in July of this year. Therefore, everything indicates that, if premiums do not increase, investors will continue to be wary.
Experts say this stability is not good for investing in ETH futures. This is because they assume there is little incentive for traders to adopt a strategy called “cash and carry.” This is an investment strategy whereby a trader simultaneously sells futures contracts and buys spot ETH. This way, it is possible to profit from the premium, thus generating a fixed income.
With fewer investors using the strategy, futures investments end up being less sought after in the long term, since positive movements are not as noticeable. Therefore, the only thing left is for the price increase of the Ethereum network token to drive the growth of the asset’s futures contracts.
ETH futures contracts have not performed so well until the middle of this year
The current outlook for Ethereum futures is much better now than it was in the first half of the year. This is because investor interest in the period remained low even as the token’s price increased. In May, for example, the token increased by almost 28%, but demand for futures contracts remained below 5%.
However, a different movement occurred shortly after, towards the end of the month. In a few days, the premium rose almost 14%, indicating greater leverage on the part of traders. However, the excitement was short-lived and the values fell significantly in the following days. This is unlikely to happen again in the current scenario, as growth has been slower.
Furthermore, the market is now led by some of the best exchanges in the world. This means that investors can feel more confident when choosing ETH futures contracts. Binance exchange controls around 30% of the total market share, while Bybit follows with 17%. In addition, it is also possible to invest in OKX, Derbit and the Chicago Mercantile Exchange.
Lower interest rates in the United States favored the rise of Ethereum and other related investments
The price increase of the ETH token and other cryptocurrencies is a result of the latest decisions by the US government. The country has been experiencing an economic crisis since the beginning of the year. Several interventions by the Federal Reserve (FED) had the opposite effect to what was expected, worsening the situation.
The agency has promoted interest rate increases a few times recently. The idea was to reduce inflation and increase the population’s purchasing power. However, the situation has only gotten worse, affecting the population’s cost of living and reflecting on the conventional and digital investment markets.
The recession seems to be being left behind only now, when the FED decided to cut interest rates. This is because the drop in rates facilitates economic growth, since people have a lower cost of borrowing and a greater propensity to pay off debts.
The effects of the decision have also started to appear in the cryptocurrency market, and the main ones have shown signs of growth. This is the case of BTC and ETH. In addition, the country’s main stock exchanges are also closing higher.
The last factor of instability is likely to be lifted soon, with the outcome of the presidential election. Technically tied in the polls are Kamala Harris and Donald Trump, who have divergent positions on the digital asset market . While she did not address the issue during her campaign, Trump has said he will loosen regulations to boost the market.
This indicates that the second half of the year should be much busier for ETH, which could see more positive results if all instability factors are overcome.
