ETH surges to a 5-month high, altcoins may ride the wave
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ETH surges to a 5-month high, altcoins may ride the wave
U.S. stocks fall, while the crypto market rises against the trend.
Navigating Web3 tides with focused insightsBy BitpushNews
On Wednesday, the latest U.S. core PCE price index for October rose 2.8% year-on-year—matching expectations but still above the Federal Reserve's 2% target. This data has further intensified market concerns about persistent inflation and raised questions about the effectiveness of the Fed's monetary tightening policy.
Tavi Costa, macro strategist at Crescat Capital, said the Federal Reserve is facing a difficult policy dilemma. He warned that risks of a second wave of inflation appear to be brewing. If this scenario materializes, the Fed will face a tough choice: further rate hikes could exacerbate government debt burdens, while slowing down could lead to runaway inflation.
Stocks Fall as Crypto Rallies
Facing inflationary pressures and uncertainty over Fed policy, traditional financial markets turned cautious. All three major U.S. equity indexes declined. By the close, the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite were down 0.42%, 0.30%, and 0.66%, respectively.
In contrast, the crypto market demonstrated strong resilience. Bitcoin surged on Wednesday, breaking above the $97,000 mark, while Ethereum rallied over 10%, hitting its highest level in months. Ether (ETH) gained 10%, reaching an intraday high of $3,687.01—the highest since June.
Most of the top 200 cryptocurrencies by market cap posted gains. Kadena (KDA) led with a 25.3% rise, followed by Uniswap (UNI) up 23.7%, and PancakeSwap (CAKE) gaining 22%.
The overall cryptocurrency market capitalization currently stands at $3.34 trillion, with Bitcoin’s market dominance at 57.1%.
Funds Rotate—Is the Altcoin Season Here?
Data from Coinglass shows Ethereum ETFs recorded positive inflows for three consecutive days, with Tuesday seeing a net inflow of as high as $40.6 million. This trend contrasts sharply with the ongoing net outflows from Bitcoin ETFs. Analysts at QCP Capital noted that the market is shifting funds from Bitcoin to Ethereum and altcoins. Beyond investor anticipation of an altcoin season, this shift is closely tied to Ethereum’s own ecosystem development and the strong performance in its derivatives market.
“After Bitcoin’s pullback, Ethereum is making a comeback, with signs indicating that capital flows are rotating into ETH and altcoins,” analysts said. Since hitting a low of 0.3204 BTC on November 21, the ETH/BTC ratio—a measure of ETH’s performance relative to BTC—has surged more than 15%.
ETH’s rally has been accompanied by strongly bullish sentiment in its derivatives market. According to Coinglass, ETH open interest (OI) hit a record high of 6.55 million ETH on Wednesday, worth $23.34 billion, continuing a two-week upward trend. Additionally, data from Velo shows that the three-month premium for ETH—measuring the gap between futures and spot prices—on major crypto exchanges including Binance, OKX, and Deribit soared to 16%.
While many expect an altcoin season to be underway, Ki Young Ju, founder and CEO of CryptoQuant, believes it may be delayed due to a lack of fresh retail capital. “To reach new all-time highs in market cap, altcoins need substantial new capital inflows into crypto exchanges. The fact that altcoin market caps remain below previous peaks indicates reduced liquidity from new exchange users,” said Ki Young Ju.
The analyst concluded that altcoins should focus on independent strategies to attract new capital rather than relying on Bitcoin’s momentum—but he remains “bullish” on altcoins.
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