Ethereum has recently gained momentum, outperforming Bitcoin in the last two days as both cryptocurrencies benefited from a favorable macroeconomic environment driven by the U.S. Federal Reserve's interest rate cut. Bitcoin and Ether, the largest cryptocurrencies by market capitalization, have experienced notable gains, with Ether showing a particularly strong performance. This rally follows the Federal Reserve’s decision to reduce interest rates, which has positively impacted risk assets, including the broader cryptocurrency market. Despite recent struggles with inflows, particularly in crypto exchange-traded funds (ETFs), the rate cut could signal a shift in investor sentiment toward increased allocations in crypto assets.

Ethereum Outperforms Bitcoin Amid Market Rebound

Ethereum Gains Market Share in Recent Rally Ethereum has seen a remarkable turnaround, outperforming Bitcoin over the last two days after losing market share in previous weeks. This shift in performance highlights Ethereum's resilience and potential to regain investor confidence, as the crypto market reacts positively to broader economic developments. Both cryptocurrencies, which dominate the market by capitalization, have shown strong gains, but Ether's recent surge has positioned it as a standout performer in the crypto space.

Federal Reserve’s Rate Cut Boosts Crypto Market

Lower Interest Rates Fuel Risk Appetite Bitcoin was trading near $63,400 on Monday morning, marking a 1.4% increase in the past 24 hours and nearly a 9% gain over the week. Ether, on the other hand, was trading around $2,680, with a 4.2% rise in the last 24 hours and an 18% jump over the week, according to CoinMarketCap data. This rally follows the Federal Open Market Committee’s (FOMC) decision last Wednesday to cut interest rates by 50 basis points, setting the federal funds target range at 4.75% to 5.00%. The rate cut has bolstered risk assets, with cryptocurrencies leading the charge in the wake of the Fed’s move.

Impact on Broader Crypto Market

Altcoins Gain Traction Alongside Major Cryptos The positive sentiment driven by the Fed's rate cut extended beyond Bitcoin and Ether, lifting the entire cryptocurrency market. Altcoins such as Solana, Dogecoin, and Cardano also posted gains over the past week, reflecting renewed investor confidence across the crypto spectrum. This broader market rally underscores the impact of macroeconomic policy on digital assets, which are increasingly seen as high-risk, high-reward investments that benefit from favorable economic conditions.

Spot ETFs Struggle Amid Mixed Sentiment

Potential Shift in Crypto ETF Flows Despite the recent gains in Bitcoin and Ether, spot ETFs linked to these cryptocurrencies have struggled, particularly since September. According to ETF tracker Farside, spot Bitcoin ETFs experienced mixed inflows and outflows during the month, while spot Ether ETFs predominantly faced outflows. However, the recent rate cut by the Fed may alter this trend, as lower interest rates could encourage investors to reallocate funds into riskier assets, including crypto ETFs. This potential shift could provide a much-needed boost to crypto-linked ETFs, which have been under pressure from fluctuating investor sentiment.

Outlook: Renewed Investor Optimism?

Rate Cuts Signal Opportunities in Crypto Market The Federal Reserve’s rate cut appears to have reinvigorated the cryptocurrency market, with major coins and altcoins showing strong performance in recent days. As the market digests the implications of continued lower interest rates, investors may increasingly turn to cryptocurrencies and related financial products, such as ETFs, as attractive alternatives. While challenges remain, particularly around regulatory clarity and market volatility, the current environment offers a renewed sense of optimism for investors seeking exposure to digital assets.