Following the 50 basis point cut in US interest rates by the Federal Reserve, major cryptocurrencies have seen a price rally. Analysts are predicting that Ethereum (ETH) could see a sharp increase in on-chain activity if this recovery turns into a sustained bull market.
Jasper De Maere, Research Lead at Outlier Ventures, shared his views on Ethereum’s potential growth under improved market conditions. De Maere believes that the increase in Ethereum’s on-chain activity will be driven primarily by speculation, as well as the increasing use of decentralized applications (dApps).
“As markets pick up, we will see increased on-chain activity on Ethereum due to speculation and dApp activity,” De Maere said. Token creation events (TGEs) and companies launching on Ethereum’s mainnet could continue this momentum, De Maere added. Many projects are reportedly waiting for favorable market conditions to launch, which could spark a new wave of activity in the ecosystem.
De Maere also highlighted the DeFi sector as an area likely to benefit from the Fed’s rate cut. “On-chain smart money will return to DeFi, and that could be bullish for Ethereum,” he said.
However, De Maere cautioned that while financial incentives may temporarily boost adoption, sustained participation will depend on the functionality of Ethereum’s ecosystem rather than speculation. “Actual product adoption is separate from market activity,” De Maere said, cautioning that financial gains alone may not attract long-term users.
He also warned that increased liquidity and risk appetite due to expected rate cuts could slow the adoption of real-world asset (RWA) tokenization, as most current tokenization efforts have focused on yield-generating assets like U.S. Treasury bonds, which could lose traction in a bullish market as riskier assets are favored.
*This is not investment advice.