On Wednesday, the latest core PCE price index for October released in the U.S. showed a year-on-year increase of 2.8%, which, while in line with expectations, remains above the Fed's 2% target.
The crypto market has shown strong resilience, rising against the trend.
Bitcoin prices surged significantly on Wednesday, breaking the $97,000 mark, while Ethereum saw an increase of over 10%, reaching a new high in months. Ethereum's price rose by 10%, peaking at $3,687.01 during the day, the highest point since June.
Tokens ranked in the top 200 by market capitalization generally rose, with Kadena (KDA) standing out with a gain of 25.3%; followed closely by Uniswap (UNI), which rose by 23.7%; PancakeSwap (CAKE) also saw a gain of 22%.
Currently, the overall market capitalization of the cryptocurrency market has reached $3.34 trillion, with Bitcoin's market share at 57.1%.
Is capital rotation signaling the arrival of the altcoin season?
According to Coinglass data, Ethereum ETF has recorded positive capital inflows for three consecutive days, with a net inflow of $40.6 million on Tuesday. This sharply contrasts with the ongoing capital outflows from Bitcoin ETF. Analysts at QCP Capital pointed out that market funds are shifting from Bitcoin to Ethereum and other altcoins.
This trend not only reflects investors' expectations for the altcoin season but is also closely related to the healthy development of Ethereum's ecosystem itself and the strong performance of the derivatives market.
The analyst stated: "After the decline in Bitcoin, Ethereum is gradually rebounding, with signs indicating that market funds are flowing into ETH and altcoins." Since the ETH/BTC ratio fell to a low of $0.3204 on November 21, this ratio has surged over 15%. This indicates that Ethereum's performance relative to Bitcoin has improved, and funds are gradually flowing into Ethereum and other related tokens, possibly signaling the upcoming altcoin season.
The rise of ETH is accompanied by strong bullish sentiment in its derivatives market. According to Coinglass data, ETH's open interest (OI) reached a record high of 6.55 million ETH on Wednesday, valued at approximately $23.34 billion, continuing the upward momentum of the past two weeks. This indicates that the market is confident about ETH's future prospects, with funds continuously flowing into its derivatives market.
Additionally, Velo data shows that the three-month futures premium for ETH on cryptocurrency exchanges Binance, OKX, and Deribit has skyrocketed to 16%.
Although the market is generally optimistic about the arrival of the altcoin season, Ki Young Ju, founder and CEO of CryptoQuant, believes that the altcoin season may be delayed due to a lack of new retail capital. Ki Young Ju pointed out: "To raise the market cap of altcoins to new historical highs, a large influx of new capital into cryptocurrency exchanges is needed. However, the market cap of altcoins is still below previous historical highs, indicating that liquidity from new exchange users is decreasing."
The analyst further summarized that altcoins need to formulate independent strategies to attract new capital, rather than simply relying on the momentum of Bitcoin. He emphasized that although the market faces challenges, he remains optimistic about the prospects of altcoins.
