- Ethereum’s underperformance could delay the highly anticipated altcoin season.
- Bitcoin’s increasing dominance could derail altco performance following the Fed’s rate cuts.
Ethereums [ETH] The muted price action and lackluster performance of US spot ETH ETFs could delay the highly anticipated altcoin season. On August 30, US spot ETH ETFs record zero flows across the board.
One analyst referred to the zero flows as ‘sad’ and underlined a lack of interest.
“I just realized that yesterday’s $ETH flow was literally zero. For some reason that’s even sadder than a negative current. No one on this planet cares about ETH anymore, lmao.”
Is ETH’s underperformance a risk for Alt Season?
Overall, the products have seen cumulative outflows since launch, valued at $477 million per Farside Investors facts.
According to Quinn Thompson, founder of crypto hedge fund Lekker Capital, the weak performance was ‘disadvantageous‘ to the altcoin universe.
“The ETH ETFs’ lackluster performance is a damaging sign for the rest of the altcoin universe… Bitcoin’s dominance will increase… ETHBTC is the alt barometer.”
For context, the ETHBTC ratio tracks the value of ETH against BTC. The ratio has been on a downward trend for more than two years, recently hitting an annual low of 0.040.
In short, ETH’s underperformance against BTC bottomed out mainly in 2024 driven due to the interest of ETF buyers.
Source: ETH/BTC, TradingView
Thompson predicted that ETHBTC would reach 0.033 by the end of 2024. In other words; the director expected ETH’s underperformance to continue until December before ETF buyers would show interest in the altcoin.
Although some altcoin watchers have timed a breakthrough for the segment Solanas [SOL] According to Thompson, the ETHBTC ratio remains an important test for the health of the sector.
At the time of writing, the Altcoin Season Index reading stood at 18, indicating it was still a solid BTC season.
Source: Blockchain Center
That said, some market watchers have speculated that the upcoming and likely Fed rate cut could give the altcoin segment a boost. According to crypto analyst Benjamin Cowen, the prospects was uncertain because a similar scenario led to altcoin capitulation in 2019.
‘#ALT/#BTC pairs opened monthly in July 2019, when the Fed cut rates for the first time to 0.38. They capitulated to 0.29 that month. The monthly open in September 2024 for ALT/BTC pairs is 0.38. The Fed is going to make cuts this month. Maybe, just maybe, this time it’s no different.’
Source: X/Cowen
At the time of writing, ETH was trading at $2.4k, down almost 10% in the past week after dropping from $2.7k.