After Powell's "dovish" stance, the cryptocurrency market shows divergence: Ethereum strongly surged close to $5,000, while Bitcoin fell back below $112,000

According to the Zhitong Finance APP, after reaching a historical high for the first time since 2021 last Friday, Ethereum set a new record over the weekend. On Sunday afternoon, the price of the world's second-largest cryptocurrency soared to a high of $4,954.81. The latest price rose less than 1% to $4,776.46. Meanwhile, Bitcoin erased all the gains from last Friday's rise, dipping to $110,779.01, the lowest level since July 10. This cryptocurrency reached an all-time high of $124,496 on August 13.

Last Friday, cryptocurrencies surged following Federal Reserve Chairman Jerome Powell's hint at an upcoming interest rate cut. Ethereum jumped 15%, while Bitcoin rose 4%.

Thanks to favorable regulatory policies, heightened market interest in stablecoins, and a new wave of Ethereum holders making large purchases, Ethereum (rather than Bitcoin) has led the cryptocurrency market for several weeks. Cryptocurrency data provider Arkham reported that Wall Street crypto bull Tom Lee's Bitmine Immersion Technologies purchased $45 million worth of Ethereum on Saturday.

Since 2021, Ethereum has tested resistance levels multiple times without success, but it has managed to hold the $4,000 price level this month.

Ben Kurland, CEO of the cryptocurrency research platform DYOR, stated, "Buyers have ultimately outnumbered sellers. Ethereum exchange-traded funds (ETFs) are continuously attracting capital inflows, and publicly traded companies are beginning to view Ethereum as a reserve asset that can generate returns—this form of demand is stickier than retail speculation."

He added, "Additionally, nearly one-third of the supply is locked in staking, scaling solutions have matured, and with interest rate cuts back on the agenda, capital costs are decreasing. These factors will transform $4,000 from a resistance level into the foundation for Ethereum's next phase of repricing."

Bitcoin VS Ethereum

Powell stated last Friday that the Federal Reserve would "consider changing our policy stance." In other words, interest rate cuts may be coming soon.

He noted that stable unemployment rates and optimistic economic data are key factors in lowering borrowing costs. However, inflation remains a concern following the tariff policies introduced by U.S. President Donald Trump.

The market widely predicts that the Federal Reserve will lower the benchmark interest rate by 25 basis points at next month's meeting, marking the first interest rate cut in the U.S. this year.

Powell's remarks triggered a strong reaction in the cryptocurrency market. Bitcoin's price soared from $112,000 to $117,000 but then pulled back.

The real star of last Friday's rally was Ethereum. This second-largest global cryptocurrency surged 15% in less than three hours. Additionally, Solana, Dogecoin, Cardano, Sui, Avalanche, and Polkadot all saw gains exceeding 10%, indicating a strong interest in high-risk assets Recent price fluctuations have revealed an interesting phenomenon in the cryptocurrency market: Ethereum now seems to be more popular than Bitcoin.

Both assets' ETFs are traded on Wall Street. Data from SoSoValue shows that last Friday, Bitcoin funds experienced an outflow of $23 million. In contrast, Ethereum funds saw an inflow of $337.6 million.

Analysts believe that ETFs have played a significant role in suppressing Bitcoin's volatility, which means that smaller cryptocurrencies are more attractive to traders seeking short-term returns.

Vivek Raman, founder of Etherealize, stated, "For many traders, Bitcoin trading is over. Ethereum seems to have a lower holding, greater volatility, and is more reactive."

Of course, Bitcoin supporters strongly oppose this view, and many confidently predict that Bitcoin will steadily approach $1 million in the coming years, ultimately surpassing gold in market value.

This would mean a 769% increase in Bitcoin's price from current levels, and they believe Bitcoin is still in its early stages, with significant upside potential. Given that financial companies are now buying Bitcoin at a pace far exceeding its mining rate, supporters argue that Bitcoin's current value does not reflect the true supply tightening situation