The approval of both spot Bitcoin and Ethereum ETFs in the United States was seen as a major milestone for the broader adoption of digital assets and the Web3 space. However, just a few months later, it’s clear that Wall Street funds are showing a stronger preference for Bitcoin over Ethereum on a larger scale.
Bitcoin has successfully positioned itself as “digital gold,” whereas Ethereum faces intense competition in the smart contract market. Layer one blockchains such as Solana (SOL), BNB Chain, Tron (TRX), and Toncoin (TON) are all competing for market share with Ethereum, adding to the pressure.
Can Ethereum maintain its dominance in the face of such fierce competition?
Data from Glassnode highlights a significant gap in cash flow between spot Bitcoin ETFs and spot Ether ETFs. In August, U.S. spot Bitcoin ETFs saw a net cash outflow of around $107 million per week, while spot Ether ETFs had a much smaller outflow of about $13 million per week.
“The relative influence of ETFs on the Ethereum market is equivalent to a range of ±1 percent of the spot volume, compared to ±8 percent for the Bitcoin ETF. This suggests that despite normalization, the appetite for the Bitcoin ETF remains an order of magnitude larger than its Ethereum counterpart,” Glassnode highlighted.
Interest Rate Cuts Could Change the Game
Despite recent net cash outflows from U.S. spot Bitcoin and Ethereum ETFs, the situation might change once the Federal Reserve starts cutting interest rates on September 18. Lower interest rates could increase investor access to funds, boosting their purchasing power and potentially altering investment trends.
Ethereum’s price is expected to outperform Bitcoin by the end of the 2024/2025 crypto bull run, which could make it more appealing to Wall Street investors in spot ETF investments.
Bitcoin’s dominance over the altcoin market is showing signs of a possible macro reversal, signaling the start of the long-anticipated altseason. This shift could further influence investor behavior, making Ethereum a stronger contender in the ETF space.
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