- Since the Fed’s September rate cut, Bitcoin has outperformed Ethereum, driven by stronger institutional adoption and higher market demand
- Ethereum’s underperformance compared to Bitcoin is attributed to the latter’s dominant first-mover advantage with institutional investors, as evidenced by record high open interest in Bitcoin CME futures
- Solana has seen a price appreciation amid a wider market downturn, fueled by increased stablecoin liquidity signaling strong purchasing power that could drive altcoin growth
Since the Federal Reserve’s rate cut last month, Bitcoin has risen more than Ethereum, indicating stronger institutional adoption and demand. However, Solana has increased amid the altcoin downturn, signaling substantial purchasing power that could further boost altcoins.
Institutional Interest Favors Bitcoin Over Ethereum
Since the Fed’s 50 basis point rate cut in September, Bitcoin’s price has risen 14%, briefly topping $69,500 on Monday. This was driven by inflows into ETFs and improving risk sentiment. Ether has underperformed, increasing only 12% since the rate cut despite benefiting from similar macro factors.
Additionally, the ETH/BTC ratio has fallen to its lowest level since April 2021, dropping below 0.04 recently. According to a Kaiko Research report, this highlights Ethereum’s slower institutional adoption compared to Bitcoin. Kaiko analysts attributed the persistent performance gap to Bitcoin’s dominant first-mover advantage with institutions.
For example, Bitcoin CME futures open interest recently hit record highs, while Ethereum CME futures remain comparatively low at 7,300 contracts worth $970 million. Ethereum has also lagged most altcoins in spot market volume this month. The volume gap between Ethereum and the top 50 altcoins reached its highest level since March.
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Solana Price Rises Amid Broader Altcoin Declines
Over the past day, altcoins have outperformed, with Solana gaining around 3% while Bitcoin and Ether declined. Analysts attribute this shift to increased stablecoin liquidity, signaling substantial purchasing power that could further boost altcoins.
The market capitalization of stablecoins has hit $160 billion, representing significant liquidity that could drive altcoin growth as sentiment improves. While Bitcoin has shown resilience amid uncertainty in traditional markets, inflation near 2% in the US and UK is also favorable for cryptocurrencies.
However, it’s important not to get overly enthusiastic about risky assets in the short term. Inflation could still flare up again, keeping rates higher for longer than expected. This would pose a risk to crypto markets.
Conclusion
In summary, while Bitcoin has led the recent crypto rally, Ethereum continues to lag likely due to slower institutional adoption. However, the influx of stablecoin liquidity bodes well for altcoins like Solana if risk appetite improves. The crypto market outlook remains cautiously optimistic amid favorable macroeconomic conditions.
