Bitcoin News Today: Ethereum Surges 30% on 95.8% Fed Rate Cut Odds

Ether’s recent price surge has been largely driven by market expectations for a Federal Reserve rate cut in September, prompting concerns among analysts that investors are overestimating the likelihood of such a policy shift and underestimating the potential for a sharp correction if expectations are not met. Ethereum, the second-largest cryptocurrency by market capitalization, has climbed to nearly $4,700—only 2.80% below its 2021 all-time high—as of early August 2025 [1].

The rally has coincided with strong inflows into ether-based exchange-traded funds (ETFs). On one notable day, spot ether ETFs recorded $1.01 billion in net inflows, marking their largest single-day inflow on record. Over the past seven days, ether has surged by 30% [2]. This momentum is being fueled by speculative bets on a Fed easing cycle, with the CME FedWatch tool pricing in a 95.8% probability of a rate cut in September [1].

Swyftx lead analyst Pav Hundal has warned that the current market move is being driven almost entirely by the assumption that the Fed will deliver a rate cut next month. “It looks like we’re priced for perfection, and that’s always when you need to be most careful,” he said, noting that ether is now “priced for perfection” amid strong ETF flows and steady funding rates [1].

Charles Edwards of Capriole Investments and REF, while bullish on ether’s long-term prospects, acknowledged the risks of unexpected Fed policy shifts, such as a delay in rate cuts due to inflationary pressures or geopolitical instability. “What if the Fed, what if something happens, inflation goes up, or, you know, some unknown changes, and they decide not to cut?” he asked, highlighting the potential for a liquidity freeze and capital outflows if Fed actions deviate from expectations [1].

Despite these concerns, Edwards remains optimistic about ether’s trajectory, particularly if Bitcoin continues to rally toward $150,000–$200,000, in which case ether could “probably quite easily double” in the coming months. He added that strong fundamentals and institutional demand are key drivers of the current rally [1].

However, not all economists are convinced that a September rate cut is a foregone conclusion. Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management, warned that Fed officials could push back against market expectations if they believe inflation or economic data does not justify a cut. “If they think the market is wrong, they will go out there,” she said, emphasizing that the Fed has a mandate to “talk down the market” when necessary [1].

Jeff Schmid, president of the Federal Reserve Bank of Kansas City, also suggested that the current policy stance remains appropriate, given ongoing inflation above the Fed’s 2% target and a still-momentum-driven economy. “Retaining a modestly restrictive monetary policy stance remains appropriate for the time being,” he stated [1].

While the market is pricing in a high probability of a 50-basis-point rate cut at the Fed’s next meeting, analysts caution that actual policy decisions will ultimately depend on incoming economic data, including the latest inflation and employment reports [4]. If data does not align with market expectations, ether could face downward pressure even if a cut is eventually enacted later in the year [10].

The current ether rally reflects a broader macroeconomic shift in crypto investing, where large-cap assets like ether are increasingly influenced by Fed policy rather than on-chain metrics or network upgrades. While this could offer more stability for long-term investors, it also exposes the market to greater volatility in response to changes in U.S. monetary policy [7].

Analysts recommend that investors balance their optimism with caution. While a rate cut could provide a tailwind for ether and other risk-on assets, overbetting on the outcome could lead to significant volatility if the Fed’s actions diverge from market expectations. Prudent risk management remains key in an environment where macroeconomic factors are dominating price movements [10].

[1] https://coinmarketcap.com/community/articles/689d7c73cd503f0cdaa2257b/

[2] https://www.aol.com/finance/ethereum-surges-near-record-investors-162035144.html

[4] https://www.curzioresearch.com/inflation-came-in-hot-will-the-fed-wait-on-a-rate-cut/

[7] https://ca.finance.yahoo.com/news/bitcoin-hits-fresh-record-fed-002718602.html

[10] https://www.fxleaders.com/news/2025/08/14/bitcoin-surges-past-124000-to-new-all-time-high-fed-rate-cut-expectations-drive-crypto-rally/