Ethereum rally continues as recent crypto softness puts bitcoin price at ‘inflection point’

Cryptocurrencies were rallying on Wednesday, with ethereum (ETH-USD) continuing to lead the charge, rising more than 2.5%, among the major cryptocurrencies, while bitcoin (BTC-USD) and Ripple’s XRP (XRP-USD) also rose.

Ether, the native token of the Ethereum blockchain, has staged a stunning comeback this year, surging more than 200% from April lows compared to a 45% rise in bitcoin during the same period.

Ether briefly hit a new all-time high Sunday, topping $4,900, as a dovish speech from Fed Chair Jerome Powell late last week lifted broader markets, with crypto continuing this rally into the weekend.

Bitcoin, meanwhile, is still down about 10% from its mid-August all-time high north of $124,000.

Ether prices ripped higher after the GENIUS Act was passed. This legislation created a framework and governance for stablecoins, digital tokens backed by assets like the US dollar.

Bernstein analysts estimate that almost 52% of the stablecoin supply is in the Ethereum ecosystem.

“As the Ethereum real-world economy grows (stablecoins and tokenized real-world assets), Ethereum becomes the leading network for blockchain banking and capital market applications,” Bernstein analyst Gautam Chhugani wrote on Monday.

Read more: Can you buy crypto with a credit card? See the pros and cons.

Corporate treasuries have been loading up on ether, sending prices higher in recent months. Wall Street has grown increasingly bullish on the Ethereum blockchain, or its decentralized network, which is widely used to store and exchange digital tokens.

At the same time, bitcoin ETFs recorded more than $1 billion in outflows last week, their worst week since March, in a reversal of steady inflow trends, said Leo Zhao, investment director at crypto exchange MEXC Ventures.

“Adding to the pressure is investor rotation into Ethereum, which has accelerated in recent times, with ETH-linked products posting multi-billion-dollar inflows already in August in light of recent strong ETH outperformance,” Zhao said.

“Bitcoin is at critical inflection point, where it could enter a period of consolidation between $110,000 and $120,000 or break lower towards key psychological levels around $105,000 to $100,000 if market momentum doesn’t pick up in the near future.”

Industry watchers noted that a massive crypto whale investor with $11.4 billion unloaded their bitcoin to invest in ether over the weekend.

“I do think part of the reason we’re seeing weakness in crypto is that so many flows have gone into ETH, a lot of them have been siphoned from bitcoin,” Fundstrat head of digital asset strategy Sean Farrell said earlier this week.

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