Key Insights
- The volume dominance of Bitcoin has reached unprecedented heights, marking its peak since the previous all-time highs.
- Ethereum ETFs have faced challenges in garnering institutional interest since their debut in late July.
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Bitcoin’s (BTC) supremacy over the leading fifty altcoins by market capitalization has surged to its highest level since the last surge toward all-time peaks in March, as per a recent report from Kaiko link.
During the sell-off on August 5, triggered by a surprising rise in interest rates in Japan, Bitcoin’s cumulative volume delta (CVD) remained notably positive across US exchanges while major altcoins faced significant selling pressure. This trend emphasizes Bitcoin’s role as a “crypto safe haven” in times of market uncertainty.
Additionally, the introduction of spot Bitcoin exchange-traded funds (ETFs) in the US has solidified Bitcoin as a viable investment option, while altcoins continue to endure larger risk premiums.
The prevailing global risk-averse sentiment, combined with a lack of compelling crypto narratives and diverging central bank strategies, has created a tough macroeconomic landscape.
Underperformance of Altcoins in Q3
Throughout Q3, prominent altcoins, especially Ethereum (ETH), have severely lagged behind Bitcoin. Since the Merge, ETH’s price has consistently underperformed compared to BTC’s, and the recent rollout of spot Ethereum ETFs in the US has not changed this trajectory.
Moreover, the majority of altcoins have remained significantly below their all-time highs set in Q1, despite improved market conditions.
Importantly, open interest in altcoin perpetual futures markets has declined, indicating a drop in demand. For instance, Binance’s open interest for Solana (SOL) has plummeted from over $1.2 billion in March to under $680 million at present, according to the report.
Bitcoin Dominance Reflected in ETF Flows
Bitcoin’s dominance is further illustrated by ETF flows, as Ethereum ETFs have experienced difficulty in drawing institutional interest since their introduction in late July.
Grayscale’s ETHE fund has faced considerable outflows, with 1.18 million ETH withdrawn from the fund in just short of two months. This figure equates to over $2.7 billion, as per data from Farside Investors.
Even though Grayscale’s newly launched mini Ethereum trust has managed to attract nearly $260 million in inflows, it has failed to counterbalance the significant outflow from the ETHE fund.
In contrast, US-listed Bitcoin ETFs have exhibited greater resilience, rebounding after episodes of outflows. For example, despite suffering $1.2 billion in outflows from August 27 to September 6, BTC funds saw net inflows surpassing $400 million shortly thereafter.