Ethereum Gains On Bitcoin Following Fed Rate Cut: Altseason Soon?

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As a seasoned crypto investor with over a decade of experience navigating the volatile world of digital assets, I must say that the recent surge in Ethereum (ETH) price relative to Bitcoin (BTC) has caught my attention. The Fed’s rate cut on September 18, 2024, seems to have ignited a spark under the altcoin market, and Ethereum is riding this wave quite impressively.

Over the past week, the value of Ethereum (ETH) has surpassed that of Bitcoin (BTC), starting from the day the US Federal Reserve (Fed) reduced their interest rate by 0.50% (50 basis points) on September 18, 2024.

Ethereum Gains On Bitcoin, Prelude To Altseason?

Over the past few days, Ethereum (ETH) has experienced significant price growth, increasing by approximately 16% to reach a current value of $2,666. This uptrend follows the Federal Reserve’s decision to lower interest rates for the first time in four years. Meanwhile, Bitcoin (BTC) has also seen a rise, up by around 9%, and is currently trading at $63,643 as we speak.

The ETH/BTC trading pair has surged from 0.0385 on September 18, to 0.0420 on September 23, indicating an increase of almost 9%. Notably, the ETH/BTC trading pair is a crucial trading pair observed by crypto analysts to gauge market sentiments toward altcoins relative to BTC. 

If the worth of Ethereum (ETH) and other alternative coins increases relative to Bitcoin (BTC), it often reflects heightened investor attention towards altcoins, possibly marking the start of an “altseason.” On the flip side, when Bitcoin outperforms Ethereum, it could signal a return to Bitcoin’s leadership in the market.

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.

For those new to the concept, a positive funding rate means that traders with long positions on Ethereum (ETH) are essentially paying the ones with short positions. This indicates a bullish outlook in the market. The adjustment in the funding rate signifies growing optimism about ETH’s future price increases, which is likely due to increased demand and confidence following the rate cut, as more people believe in ETH’s potential.

Keep in mind that sudden fluctuations in funding rates may trigger market adjustments. These adjustments can occur when there’s overly optimistic sentiment or shifts in external circumstances. So, it’s wise for investors to stay vigilant and adapt accordingly.

Ethereum Faces Stiff Competition From Other Blockchains

2024 saw Ethereum receiving criticism due to its underperformance compared to other digital currencies in the market. Even significant advancements, such as the US Securities and Exchange Commission (SEC) approving ETH exchange-traded funds (ETFs), did not lead to substantial growth for the second-largest cryptocurrency by market capitalization.

On the other hand, rival blockchain platforms for smart contracts, such as Solana, Binance Coin, and Tron, have shown significant progress not just in their market value increase, but more importantly, in the expansion of their underlying infrastructure for development.

At this year’s Solana Breakpoint event in Singapore, I had the opportunity to witness a plethora of advancements within the Solana ecosystem. One particularly noteworthy announcement was from Franklin Templeton, who shared their intentions to introduce a mutual fund specifically tailored for the Solana blockchain.

Just as everyone’s attention is focused on the release of Changpeng Zhao, the former CEO of Binance, from prison on September 29, 2024, crypto experts anticipate that this event could ignite a surge in optimistic trading for Binance’s native token BNB. Despite the fact that Zhao was imprisoned due to money laundering allegations, BNB has proven remarkable tenacity.

As more people adopt Ethereum’s second-layer technologies for their high scalability and low transaction fees, it’s likely that the market for smart contracts will grow increasingly competitive. At this moment, ETH is trading at $2,660, marking a 3.3% increase over the past 24 hours.

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2024-09-25 16:16