Ethereum Outshines Bitcoin After U.S. Federal Reserve Rate Cut, But Here’s How Volatility Could Crash The Party
Ethereum (CRYPTO: ETH) has been outperforming Bitcoin (CRYPTO: BTC) following the U.S. Federal Reserve’s decision to cut its Federal Funds rate by 50 basis points last Wednesday.
What Happened: Since the central bank’s first rate cut in four years, Ethereum’s price has surged over 16%, significantly outpacing Bitcoin’s 6% increase during the same period, The Block reported.
Market data from Coinglass shows that the Ethereum perpetual futures funding rate has flipped positive since the rate cut, currently standing at 0.0082%.
This signals a shift in market sentiment, indicating increased bullishness toward Ethereum.
According to Ruslan Lienkha, chief of market at crypto exchange YouHodler, this positive funding rate reflects heightened demand for leveraged long positions in Ethereum.
However, Lienkha warned of potential risks associated with over-optimism in the market.
“While funding rates typically indicate medium to long-term trends in commodity markets, crypto funding rates are notably more volatile,” he said.
He also emphasized that opening short positions in anticipation of a long squeeze may be too risky at this time due to the heightened market volatility.
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