Written by: BitpushNews
On Wednesday, the latest U.S. core PCE price index for October rose 2.8% year-on-year, consistent with expectations but still above the Federal Reserve's 2% target. This data further exacerbated market concerns about persistently high inflation and raised doubts about the effectiveness of the Federal Reserve's monetary policy tightening.
Crescat Capital macro strategist Tavi Costa stated that the Federal Reserve is facing a tricky policy dilemma. He warned that the risk of a second wave of inflation seems to be brewing. If this happens, the Federal Reserve will face a tough choice: further rate hikes could exacerbate the burden of government debt, while slowing down rate hikes could lead to uncontrolled inflation.
U.S. stocks fell in response, while the cryptocurrency market rose against the trend.
In the face of inflation pressures and uncertainty in Federal Reserve policy, traditional financial markets have been cautious. The three major U.S. stock indices all saw declines. By the close, the S&P 500, Dow Jones, and Nasdaq dropped by 0.42%, 0.30%, and 0.66%, respectively.
However, the cryptocurrency market has shown strong resilience. Bitcoin's price surged significantly on Wednesday, breaking through the $97,000 mark, while Ethereum rose over 10%, reaching a multi-month high. Ethereum (ETH) increased by 10%, hitting a daily high of $3,687.01, the highest since June.
The top 200 tokens by market cap saw a broad increase. Among them, Kadena (KDA) rose the most, reaching 25.3%; followed by Uniswap (UNI) with a rise of 23.7%; and PancakeSwap (CAKE) with a rise of 22%.
The current total market value of cryptocurrencies is $3.34 trillion, with Bitcoin's market share at 57.1%.
Capital rotation, is the altcoin season coming?
Coinglass data shows that Ethereum ETFs recorded positive fund inflows for three consecutive days, with a net inflow of up to $40.6 million on Tuesday. This trend sharply contrasts with the continued net outflows from Bitcoin ETFs. QCP Capital analysts noted that the market is shifting funds from Bitcoin to Ethereum and altcoins. This phenomenon is closely related not only to investors' expectations for the altcoin season but also to the robust performance of Ethereum's own ecosystem and derivatives market.
Analysts stated: 'After Bitcoin's decline, Ethereum is making a comeback, with signs that the market is shifting funds towards ETH and altcoins.' Since hitting a low of $0.3204 on November 21, the ETH/BTC ratio (which measures ETH's performance relative to BTC) has soared over 15%.
The rise of ETH is accompanied by strong bullish sentiment in its derivatives market. According to Coinglass data, ETH open interest (OI) reached a historical high of 6.55 million ETH on Wednesday, valued at $23.34 billion, continuing the growth trend of the past two weeks. Additionally, data from Velo shows that the three-month premium of ETH on cryptocurrency exchanges Binance, OKX, and Deribit surged to 16%.
Although the market generally anticipates the arrival of the altcoin season, CryptoQuant founder and CEO Ki Young Ju believes that the altcoin season may be delayed due to a lack of new retail capital. Ki Young Ju stated: 'For altcoins to reach historical new highs in market value, a large influx of new capital into cryptocurrency exchanges is needed. The lower market cap of altcoins compared to previous historical highs indicates a decrease in liquidity from new exchange users.'
The analyst summarized that altcoins should focus on developing independent strategies to attract new capital rather than relying on Bitcoin's momentum, but he still remains 'optimistic' about altcoins.
