Key Points
- Ethereum’s muted performance and zero flows in US spot ETH ETFs could delay the anticipated altcoin season.
- Bitcoin’s increasing dominance might negatively impact altcoins following potential Fed rate cuts.
Ethereum’s Stagnant Performance
Ethereum’s [ETH] lackluster price action and the uninspiring performance of US spot ETH ETFs could potentially postpone the much-anticipated altcoin season. On 30th August, US spot ETH ETFs recorded no flows whatsoever. An analyst described the zero flows as ‘sad’, highlighting a lack of interest in Ethereum.
The Impact on Altcoin Season
Cumulatively, since their inception, these products have experienced outflows worth $477 million, according to Farside Investors data. Quinn Thompson, the founder of crypto hedge fund Lekker Capital, stated that this weak performance was ‘detrimental’ to the altcoin universe.
The ETHBTC ratio, which tracks Ethereum’s value relative to Bitcoin, has been in a downtrend for over two years and recently hit a yearly low of 0.040. In other words, Ethereum’s underperformance compared to Bitcoin reached a record low in 2024, mainly driven by ETF buyer interest.
Thompson predicted that the ETHBTC ratio would hit 0.033 by the end of 2024, implying that Ethereum’s underperformance might continue until December before ETF buyers show interest in the altcoin. Even though some altcoin observers have been predicting a breakout for the segment using Solana’s [SOL] performance, the ETHBTC ratio remains a significant indicator of the sector’s health.
At the time of writing, the Altcoin Season Index reading was at 18, suggesting that it was still a firm Bitcoin season. However, some market observers have speculated that the upcoming and likely Fed rate cut could boost the altcoin segment. Crypto analyst Benjamin Cowen stated that the outlook was uncertain as a similar scenario in 2019 led to altcoin capitulation.
At the time of writing, Ethereum traded at $2.4k, down nearly 10% in the past week after dropping from $2.7k.
