This article is also available in Spanish.
Ethereum (ETH) price has outperformed Bitcoin (BTC) in the past week since the US Federal Reserve (Fed) cut interest rates by 50 basis points (bps) on September 18, 2024.
Ethereum Gains From Bitcoin, A Prelude To Altseason?
Ethereum has had an amazing few days in terms of its price action. ETH is up 16% to $2,666 since the Fed cut rates for the first time in four years. BTC is up 9% over the same period, trading at $63,643 at press time.
Related Reading
The ETH/BTC trading pair rose from 0.0385 on September 18, to 0.0420 on September 23, representing an increase of about 9%. Notably, the ETH/BTC trading pair is a key trading pair seen by crypto analysts to gauge market sentiment for BTC-related altcoins.
When ETH and other altcoins gain value against BTC, it raises more investor interest in altcoins, which may signal the start of the “altseason.” Conversely, when BTC surpasses ETH, it may indicate a shift to Bitcoin dominance.
It is worth highlighting that the Ethereum futures funding rate has turned positive since the interest rate cut, standing at 0.0058% according to to data from cryptocurrency futures trading and information platform CoinGlass.
For the uninitiated, a positive liquidity ratio means that traders holding long positions – in this case, long ETH – are paying off short positions, indicating bullish market sentiment. The change in the funding rate raises a lot of optimism about the future value of ETH, which may be fueled by increased demand and confidence following the rate cut.
That said, investors should be aware of sharp movements in funding levels, as this can lead to market corrections amid over-optimism or due to any changes in external factors.
Ethereum Faces Stiff Competition from Other Blockchains
Throughout 2024, Ethereum has faced criticism for its underperformance relative to its competitors. Even major developments, such as the US Securities and Exchange Commission’s (SEC) approval of ETH exchange-traded funds (ETFs) failed developing the second largest cryptocurrency by the most market cap.
In contrast, competing smart contract platforms such as Solana (SOL), Binance Coin (BNB), and Tron (TRX) have made remarkable strides not only in terms of price appreciation but also in terms of ecosystem infrastructure development.
Related Reading
For example, Solana’s ecosystem saw many improvements Singapore’s recently concluded Solana Breakpoint 2024 event. Among other announcements, Franklin Templeton revealed his plans to launch a mutual fund in Solana.
Similarly, all eyes are on the release of former Binance CEO Changpeng Zhao from prison on September 29, 2024. Crypto Analysts predict that Zhao’s release could trigger bullish momentum for Binance’s native token, BNB, which has shown remarkable resilience despite the exchange’s former CEO being arrested on money laundering charges.
By going up adoption of Ethereum layer-2 solutions that offer high scalability with low transaction costs, expect the smart contract space to become increasingly competitive. ETH is trading at $2,660 at press time, up 3.3% in the last 24 hours.
Featured image from Unsplash, Charts from Tradingview.com