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By Omkar Godbole (All times ET unless indicated otherwise)
The current bull market is emulating a bicycle race’s paceline, where the front rider expends energy to drive forward, creating a slipstream for the riders behind before rotating to the back to rest while another rider picks up the effort.
Ether (ETH) took the leader’s duties over the weekend. The second-largest cryptocurrency rose from $3,000 to over $3,300, dragging along bitcoin
“This is one of the few times when a rally in major altcoins has inspired BTC to break through. It’s usually the other way around,” Alex Kuptsikevich, a senior analyst at the FxPro, said in an email. “Altcoins are mostly staying out of this race for now, taking a break after last week’s rally.”
BTC’s ascent continues to be driven by spot market demand, as evidenced by the narrowing ratio between trading volumes in futures and spot markets. The ratio has dropped to the lowest since 2022, according to Swissblock Technologies.
Still, at least two factors call for caution on the part of the bulls. Firstly, according to Coinglass, bitcoin is still trading at a discount on Coinbase relative to Binance, a sign of weak demand from U.S.-based institutions. Secondly, cumulative spot and futures trading volumes are notably lower than in July (see Chart of the Day), when prices first topped $120,000, according to Swissblock Technologies. This negative volume divergence indicates weaker buying pressure.
The bullish mood remains more pronounced in ether than bitcoin. On Deribit, the notional open interest in ether calls is nearly 2.3 times greater than in ether puts. The figure for bitcoin is well below 2. ETH’s rise is supported by on-chain activity, with daily transaction volume on the network hitting records and the number of new addresses nearing the high reached four years ago.
Still, ether appears vulnerable to pullbacks because 97% of ETH-holding addresses are “in-the-money,” according to Sentora. In other words, the current price is above the acquisition cost of most addresses, which means there is a strong incentive for these holders to take profits.
A similar trend exists for XRP, the payments-focused cryptocurrency, which lagged over the weekend but rose 3% early Monday. Speaking of the broader altcoin market, it could soon have its time because BTC’s dominance rate is close to breaching a key support. (Check the Technical Analysis section.)
In traditional markets, the U.S. two-year Treasury yield, which is sensitive to short-term interest-rate expectations, held below its 200-day average for the first time since 2022. The decline is consistent with expectations for Fed interest-rate cuts.
The case for a September reduction has strengthened, with some analysts suggesting that even a hotter-than-expected CPI release this week would not deter the Fed from easing. Stay alert!
The CoinDesk Policy & Regulation conference (formerly known as State of Crypto) is a one-day boutique event held in Washington on Sept. 10 that allows general counsels, compliance officers and regulatory executives to meet with public officials responsible for crypto legislation and regulatory oversight. Space is limited. Use code CDB10 for 10% off your registration through Aug. 31.
