• Ethereum’s underperformance could delay the much-awaited altcoin season. 
• Bitcoin’s rising dominance could derail altcoin performance post-Fed rate cuts. 

Ethereum’s [ETH] muted price action and the lackluster performance of US spot ETH ETFs could delay the much-awaited altcoin season. In fact, on 30th August, the US spot ETH ETFs record zero flows across the board.

One analyst referred to the zero flows as ‘sad’ and underscored a lack of interest. 

‘I just realised that yesterday’s $ETH flow was a literal zero. For some reason, that’s even more sad than a negative flow. No one on this planet cares about ETH anymore lmao.’ 

Is ETH underperformance a risk to Alt Season?

Overall, the products have seen cumulative outflows since inception, worth $477 million per Farside Investors data.

According to Quinn Thompson, founder of crypto hedge fund Lekker Capital, the weak performance was ‘detrimental’ to the altcoin universe. 

“The ETH ETFs’ lacklustre performance is a detrimental sign to the rest of the altcoin universe…Bitcoin dominance will rise…ETHBTC is the alt barometer.’ 

For context, the ETHBTC ratio tracks ETH’s value relative to BTC. The ratio has been in a downtrend for over two years and recently hit a yearly low of 0.040.

In short, ETH’s underperformance relative to BTC reached a record low in 2024, primarily driven by ETF buyer interest. 

Thompson projected that ETHBTC would hit 0.033 by the end of 2024. Put differently; the exec expected ETH underperformance to continue until December before ETF buyers show interest in the altcoin. 

Although some altcoin watchers have been timing a breakout for the segment using Solana’s [SOL] performance, the ETHBTC ratio remains a significant test for the sector’s health per Thompson. 

At the time of writing, the Altcoin Season Index reading was at 18, suggesting that it was still a firm BTC season. 

That said, some market watchers have been speculating that the upcoming and likely Fed rate cut could boost the altcoin segment. According to crypto analyst Benjamin Cowen, the outlook was uncertain as a similar scenario in 2019 led to altcoin capitulation. 

‘#ALT / #BTC pairs monthly open in July 2019 when the Fed cut rates for the first time was 0.38. They capitulated to 0.29 that month. The monthly open in September 2024 for ALT/BTC pairs is 0.38. The Fed will cut this month. Maybe, just maybe, this time is not different.’

At the time of writing, ETH traded at $2.4k, down nearly 10% in the past week after dropping from $2.7k.