Altcoins struggle to attract demand as Bitcoin's market position strengthens.
Key Takeaways
- Bitcoin's volume dominance has reached its highest level since prices last approached all-time highs.
- Ethereum ETFs have struggled to attract institutional demand since their launch in late July.
Bitcoin’s (BTC) dominance over the top fifty altcoins by market cap is now at its highest since prices last approached all-time highs in March, according to a recent Kaiko report.
During the Aug. 5 sell-off, related to the sudden spike in interest rates in Japan, Bitcoin’s cumulative volume delta (CVD) remained strongly positive on US exchanges, while major altcoins experienced extensive selling. This trend highlights Bitcoin’s status as a “crypto safe haven” during periods of uncertainty.
Moreover, the launch of spot Bitcoin exchange-traded funds (ETFs) in the US has reinforced Bitcoin’s status as an investable asset, while altcoins continue to face higher risk premiums.
The current global risk-off mood and lack of crypto narrative, coupled with diverging central bank policies, contribute to a challenging macro environment.
Altcoins underperform in Q3
In Q3, large-cap altcoins, including Ethereum (ETH), have underperformed Bitcoin. ETH’s price has consistently lagged behind BTC’s since the Merge, and the launch of spot Ethereum ETFs in the US has not reversed this trend.
Furthermore, most altcoins also remained well below their all-time highs in Q1 despite more favorable market conditions.
Notably, open interest in altcoin perpetual futures markets has fallen, indicating dwindling demand. For instance, Solana’s (SOL) open interest in Binance has decreased from over $1.2 billion in March to less than $680 million currently, the report pointed out.
Bitcoin dominance shown in ETF flows
Bitcoin’s dominance is also highlighted by the ETF flows, as Ethereum ETFs have struggled to attract institutional demand since their launch in late July.
Grayscale’s ETHE fund has experienced significant outflows, with 1.18 million ETH leaving the fund in just under two months. According to Farside Investors’ data, this amount equates to over $2.7 billion.
Despite Grayscale’s new mini Ethereum trust attracting nearly $260 million in inflows, it has failed to offset the massive exodus from the ETHE fund.
On the other hand, US-traded Bitcoin ETFs have shown more resilience, bouncing back after periods of outflows. For example, after experiencing $1.2 billion in outflows between August 27 and September 6, BTC funds saw net inflows of over $400 million shortly after.
