The Fed Reserve cut 25 basis points yesterday, making it the third consecutive rate cut for the year. Although the rate cut is the talk of the town, it is just a distraction, nothing more.
On December 10, the Fed cut interest rates by another 25 basis points, making it the third cut for the year. Following this move, the interest rate cut for borrowing fell from 3.75%-4.00% to 3.5%-3.75%. However, consistent with earlier instances, the crypto markets did not move as the rate cut was already priced in, and the tinder needed to ignite a rally was missing.
When everyone is interested in the headlines about the third Fed rate cut for the year, it is just another distraction, says crypto analyst Dan Gamberdello. Instead of focusing on the Fed rate cut, the analyst drew attention to the Russell 2000 index.
Russell 2000 sets new uptrend
The Russell 2000, which represents 2000 businesses with small caps, or the benchmark for small-cap equities, is nearing its all-time high, establishing a solid uptrend.
The Russell 2000 or the Purchasing Managers Index are two of the parameters that are used to determine the health of the economy.
When the PMI or the Russell 2000 starts an uptrend, the crypto markets follow. Since both these moves are in unison, Gamberdello states that there could be a bull run coming next year.
Altcoins set up looks bullish
In addition to that, altcoins are also perfect for a rally. As shown in the chart below, the total market cap of the altcoins have been rebounding inside an ascending channel hitting the upper and lower trendlines. As it is close to the lower trendline, there is going to be another rebound taking it to $1.8 trillion from $1.3 trillion, the current value.
During September 2019 when quantitative tightening (QT) ended the ETH prices surged. QT is a time where the government injects more liquidity into the market by buying back T-bills, etc. Right now QT has ended and there could be an Ethereum spike approaching, and this could ripple into other altcoins.
ETH aims $4.7K
Looking at the technical part of Ethereum, the coin has almost completed the ascending triangle pattern, which has a flat top and a rising bottom. Once the pattern is complete, the coin usually breaks towards the upside.
Given that the above mentioned scenario validates, ETH could rise above the $3.6K resistance level and hit $4.7K.
The Fed interest rate cut is the tip of the iceberg, which draws attention, but there is something bigger happening beneath.
