Ethereum Gains On Bitcoin, Prelude To Altseason?
Ethereum has had an impressive last few days in terms of price action. ETH has surged by 16% to $2,666 since the US Federal Reserve (Fed) cut interest rates by 50 basis points (bps) on September 18, 2024. In comparison, Bitcoin (BTC) has risen by 9% in the same period, trading at $63,643 at press time.
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The ETH/BTC trading pair has surged from 0.0385 on September 18 to 0.0420 on September 23, indicating almost a 9% increase. This trading pair is crucial for crypto analysts to gauge market sentiments toward altcoins relative to BTC.
When ETH and other altcoins gain value against BTC, it suggests increased investor interest in altcoins, potentially signaling the beginning of an “altseason.” Conversely, when BTC outperforms ETH, it may indicate a shift back to Bitcoin dominance.
It’s worth highlighting that the Ethereum futures funding rate has turned positive since the interest rate cut, standing at 0.0058%, according to data from cryptocurrency futures trading and information platform CoinGlass.
A positive funding rate implies that traders holding long positions – in this case, long ETH – are paying short positions, reflecting bullish market sentiments. This change in funding rate suggests greater optimism regarding ETH’s future price, likely driven by increased demand and confidence following the rate cut.
However, investors should be cautious of sharp movements in funding rates as this could lead to market corrections amidst excessive optimism or due to any changes in external factors.
Ethereum Faces Stiff Competition From Other Blockchains
Throughout 2024, Ethereum has faced criticism for its lackluster performance relative to its competitors. Even major developments, like the US Securities and Exchange Commission’s (SEC) approval of ETH exchange-traded funds (ETFs), failed to propel the second-largest cryptocurrency by market cap significantly.
In contrast, competing smart contract platforms like Solana (SOL), Binance Coin (BNB), and Tron (TRX) have made impressive strides not only in terms of price appreciation but also regarding the development of ecosystem infrastructure.
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For instance, the Solana ecosystem witnessed many developments at Singapore’s recently concluded Solana Breakpoint 2024 event. Among other announcements, Franklin Templeton unveiled its plans to launch a mutual fund on 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 spark bullish momentum for Binance’s native token BNB, which has shown incredible resilience despite the exchange’s former CEO being imprisoned on money laundering charges.
With the rising adoption of Ethereum layer-2 solutions offering high scalability with minimal transaction costs, expect the smart contract space to become increasingly competitive. ETH trades at $2,660 at press time, up 3.3% in the last 24 hours.
Conclusion
The recent performance of Ethereum against Bitcoin is noteworthy and could signal the start of an altseason. However, ETH faces stiff competition from other blockchain platforms. Investors should remain cautious and keep an eye on market movements and external factors that could influence cryptocurrency prices.
