Bitcoin may be riding the ETF wave, but altcoins are where the rally is really happening

Bitcoin and Ether remained in positive territory on Wednesday afternoon, while altcoins maintained their dominance. Analysts believe this could signal the start of a phase characterized by increased risk appetite.

Polygon (MATIC) and Chainlink (LINK) posted double-digit gains on Wednesday. Solana, which had previously led the rally, slowed down and lost about 0.7% for the week. SOL continues to rise by more than 85% in the last 30 days.

According to analysts, leverage has increased, meaning traders are borrowing again to make their investments. Binance launched a Tether Earn product this week that promises lenders a 13% annual percentage return.

GMX and Arbitrum DAO launched an incentive program on Wednesday that could give traders an annual return of up to 75% on tokens like Ripple (XRP) and Solana (SOL).

According to data from CoinShares, traders are investing more in smaller tokens. Last week, Solana recorded $11 million in inflows and Chainlink took in $2 million, representing 17% of total assets under management.

For Solana, net buying was led by Coinbase, with 2.2 million tokens purchased in the market between October 18 (the start of the rally) and November 6, according to data from Kaiko. Investors also poured money into Polygon and Cardano, which saw gains of $800,000 and $500,000 respectively last week, data from CoinShares shows.

Bitcoin continues to attract investors, buoyed by recently fallen but still high bond yields. Noelle Acheson, author of the newsletter “Crypto is Macro Now,” cites continued enthusiasm for exchange-traded funds as one factor.

“We can see that annual BTC daily basis on Binance has reached its highest level since the rush of excitement in June when BlackRock submitted its spot BTC ETF proposal,” Acheson said. “It is also worth taking a look at the BTC base, which reflects the premium associated with futures pricing and can be used as a gauge of sentiment – ​​a positive base means traders are optimistic that the price will rise becomes.”

ETF optimism may be premature, however, and aside from the yield farming hype, much still depends on macroeconomic conditions, said Craig Erlam, senior analyst at Oanda. Erlam said investors were battling hawkish comments from central banks around the world, negative economic expectations and speculation about interest rate cuts next year.

“Even if central banks were of the view that interest rates could fall next year, it would be unrealistic to expect them to say so at this time as it would confuse their message that interest rates need to stay higher for longer would be undermined,” he added.

Futures markets are still largely relying on the Fed to keep interest rates at current levels, with CME data pricing in a 90% chance of a pause at the next policy meeting in December.

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