Cryptocurrency Market Sees Ether Lead the Charge, Bitcoin Follows

The current cryptocurrency bull run is mirroring the dynamics of a bicycle paceline, where the lead rider takes the strain, creating a slipstream for those behind, before rotating to the back to recover. Over the weekend, Ether assumed the lead, surging from $4,000 to over $4,300 and pulling Bitcoin along, which had been struggling to gain momentum. Early in the morning, Bitcoin took the front position, rising from $119,000 to $122,300. According to Alex Kuptsikevich, a senior analyst at FxPro, this is a rare instance where a rally in major altcoins has prompted Bitcoin to break through, typically the opposite occurs. Altcoins are currently on the sidelines, taking a breather after the previous week's rally. The ascent of Bitcoin is driven by demand in the spot market, as indicated by the decreasing ratio between futures and spot market trading volumes, which has dropped to its lowest since 2022, according to Swissblock Technologies. However, two factors suggest caution for the bulls. Firstly, Bitcoin is trading at a discount on Coinbase compared to Binance, signaling weak demand from US-based institutions, as per Coinglass. Secondly, cumulative spot and futures trading volumes are significantly lower than in July when prices first exceeded $120,000, according to Swissblock Technologies, indicating weaker buying pressure. The bullish sentiment is more pronounced in Ether than in Bitcoin. On Deribit, the notional open interest in Ether calls is nearly 2.3 times greater than in Ether puts, and the figure for Bitcoin is well below 2. Ether's rise is supported by on-chain activity, with daily transaction volume on the network reaching records and the number of new addresses nearing a four-year high. Nonetheless, Ether appears vulnerable to pullbacks since 97% of ETH-holding addresses are 'in-the-money,' meaning the current price is above the acquisition cost of most addresses, providing a strong incentive for these holders to realize profits. A similar trend is observed for XRP, which lagged over the weekend but rose 3% early Monday. The broader altcoin market may soon have its turn, as BTC's dominance rate is close to breaching a key support level. In traditional markets, the US two-year Treasury yield, sensitive to short-term interest-rate expectations, has held below its 200-day average for the first time since 2022, consistent with expectations for Fed interest-rate cuts. The case for a September reduction has strengthened, with some analysts suggesting that even a hotter-than-expected CPI release this week would not deter the Fed from easing. Key events to watch include token events, conferences such as The CoinDesk Policy & Regulation conference, and market movements.