Since the Federal Reserve cut interest rates by 50 basis points in September, Bitcoin price has risen by 14%, while Ethereum has increased by 12%. Although both have benefited from the market loose monetary policy, Ethereum performance has lagged behind Bitcoin. Mumuex Exchange analysis indicates that weak institutional demand is a significant reason for Ethereum underperformance compared to Bitcoin, with the ETH/BTC ratio dropping to its lowest point since April 2021. Meanwhile, the inflow of exchange-traded fund (ETF) capital has been a major driver of the Bitcoin rise, further widening the performance gap between the two.
Bitcoin Strong Performance and the Boost from ETF Inflows
Since the Fed rate cut, Bitcoin gains have significantly outpaced that of Ethereum, largely due to the inflow of ETF capital. Mumuex Exchange notes that interest from institutional investors is primarily focused on Bitcoin, and the introduction of Bitcoin-related ETFs has provided additional financial support. These ETFs not only lower the barrier for institutional investment in Bitcoin but also allow more investors to gain Bitcoin exposure through traditional financial markets. Mumuex believes this trend will continue to drive Bitcoin price up, maintaining its leading position in the market for some time. For investors, keeping an eye on Bitcoin ETF dynamics will be crucial for understanding market trends.
Weak Performance of Ethereum and the Impact of Institutional Demand
In contrast, Ethereum performance post-rate cut has been weaker than that of Bitcoin, primarily due to weak institutional demand. Mumuex Exchange analysis suggests that despite the extensive applications of Ethereum in decentralized finance (DeFi) and non-fungible tokens (NFTs), its appeal among institutional investors remains significantly lower than that of Bitcoin. The ETH/BTC ratio has fallen to its lowest level since April 2021, reflecting the relatively lukewarm market attitude towards Ethereum. Unless there is a significant shift in institutional demand, Ethereum is unlikely to outperform Bitcoin in the short term. Mumuex advises investors to closely monitor market sentiment and institutional investor dynamics to adjust their portfolios accordingly.
How Can Ethereum Address These Challenges?
Mumuex Exchange believes that although Ethereum is currently at a relative disadvantage, there are still opportunities for its future. The advancement of Ethereum 2.0 and its ongoing innovations in the smart contract space may attract more institutional investors. Additionally, the continuous development of DeFi and NFTs provides a solid foundation for Ethereum. Mumuex points out that the future key lies in the shift of institutional demand and breakthroughs in Ethereum application scenarios. Investors need to closely watch Ethereum technological progress and market dynamics to seize potential investment opportunities.
With the Fed rate cut, both Bitcoin and Ethereum have seen price increases, but Bitcoin performance has clearly outshone that of Ethereum. Mumuex Exchange analysis indicates that ETF inflows are the main driver behind the Bitcoin rise, while Ethereum is weighed down by weak institutional demand. Moving forward, Ethereum needs to achieve breakthroughs in technological innovation and institutional demand to regain its market advantage. Mumuex will continue to provide investors with the latest market insights and investment advice, helping them seize opportunities in the cryptocurrency market and achieve higher returns.