Crypto Market Update

Crypto markets extended gains on Wednesday as traders reacted to a mix of political optimism, dovish Fed expectations, and strong ETF inflows into ether (ETH).

Altcoins contributed to their rally late Tuesday after Treasury Secretary Scott Bessent suggested the Federal Reserve should consider a 50 basis point rate cut in its upcoming September meeting.

Ether continued its strong week with nearly 30% gains, approaching fresh highs that historically precede market enthusiasm in altcoins and microcap tokens.

According to data, ETFs linked to ether recorded $520 million in positive flows on Tuesday, projected to exceed $2 billion in weekly flows for the first time.

Bitcoin remained steady just below $120,000, with Solana’s SOL surging 12% to $198, BNB Chain’s BNB adding 5% to $837, and XRP gaining 4% to $3.25. Dogecoin and Cardano also rose over 8%, continuing to follow ETH’s price trends.

Traders noted that recent comments from U.S. President Donald Trump, who ordered regulators to explore adding crypto to U.S. 401(k) retirement plans, helped boost sentiment. Although this idea is still in the exploratory phase, direct exposure to crypto in retirement accounts could signify a major shift in demand.

“Ethereum has been the standout, with mainstream equity analysts now joining the FOMO trade,” stated Augustine Fan, head of insights at SignalPlus. He noted that Bitcoin’s implied volatility remains near all-time lows while ETH’s short-dated volatility has surged, indicating expectations of more near-term price action and upside in ETH.

Implied volatility (IV) forecasts how much a cryptocurrency’s price might fluctuate in the future based on options prices. Low IV means traders expect stability, while high IV indicates anticipation of significant moves.

The markets are now pricing a strong likelihood of the Federal Reserve cutting rates before year-end, potentially easing macro headwinds for risk assets.

“Ethereum’s breakout past $4,600 reflects growing confidence in its institutional adoption,” remarked Nick Ruck, director at LVRG Research. He added that Bitcoin’s stability near $119,000 demonstrates resilient demand, and a dovish Fed pivot could further enhance ETH’s outperformance, especially amid ETF speculation and upcoming scaling upgrades.

Alex Kuptsikevich from FxPro pointed out that this rally is unusual since altcoin strength appears to be driving Bitcoin higher, rather than the reverse. “Bitcoin is testing historic highs above $122,000, with the next major target at $135,000-$138,000. Ethereum is close to its all-time high above $4,800,” he noted.