Market Recap: ETH/BTC At Multi-Year Low, Bernstein Bullish On DeFi

Digital assets are off to a bearish start to the week, with the price of Bitcoin (BTC) shedding 2.9% over the past 24 hours.

Leading altcoins suffered similar drawdowns, with Solana (SOL) dropping 2.7%, Toncoin (TON) down 1.9%, and Polkadot (DOT) tumbling 5.1%.

Leo Token (LEO), Tokenize Xchange (TKK), and Tron (TRON) were the only top 100 cryptocurrencies by market cap to post daily gains of around 1%.

ETH underperforms

Ethereum (ETH) continues to underperform, with Ether crashing 4.5%. ETH is also down 0.4% over seven days, making it the only non-stablecoin top 10 crypto asset to post a weekly loss.

Ether’s bearish momentum coincides with the price of ETH dropping below 0.04 BTC for the first time since April 2021. The ETH/BTC ratio is now down more than 50% since the network’s highly anticipated transition to proof-of-stake consensus in September 2022.

Data from IntoTheBlock shows 54% of on-chain ETH holders currently sitting in profit, down from around 90% in June as ETH tested $4,000 after the U.S. Securities and Exchange Commission suddenly approved spot Ether exchange-traded funds (ETFs).

Bittensor (TAO) was the worst-performing asset of the past 24 hours with a 12.8% loss, followed by Brett (BRETT) with a 9.6% pullback, and Sei (SEI) with a 9% retracement.

Bernstein bullish on DeFi

Despite the recent web3 downtrend, Bernstein, a research and brokerage firm, is betting that DeFi will soon make a comeback.

In a note to clients published on Sept. 16, Bernstein analysts said that looming rate cuts will bolster the value proposition of DeFi yields. The researchers also noted that the number of DeFi users is up 300% since January 2023.

“With a rate cut likely around the corner, DeFi yields look attractive again,” the report said. “This could be the catalyst to reboot crypto credit markets and revive interest in DeFi and Ethereum.”

Bernstein added Aave to its model digital asset portfolio at a 10% allocation, making it the third-largest portfolio asset behind Bitcoin and Ethereum at 25% each.

Aave is down 5.8% over the past 24 hours, but up 16% in 14 days.

Bitcoin ETF inflows

The downward momentum comes despite Bitcoin ETFs enjoying bullish inflows last week.

Investors poured $403.81 million into U.S.-based spot Bitcoin ETFs in five days, including a $263 inflow on Friday — the largest in eight weeks, according to Sosovalue.

Spot Ether ETFs suffered a modest outflow of $12.9 million, with the sector posting outflows for seven of the eight weeks that spot ETFs have traded.

CoinShares reported that the broader crypto exchange-traded product (ETP) market hosted $436 million worth of inflows. Bitcoin ETPs raked in $436 million, while multi-asset funds took in $22.8 million, and Solana products received $3.8 million. Ether ETPs shed $19 million, followed by short Bitcoin funds with an $8.5 million outflow.

Analysts forecast interest rate cuts

The crypto market dip comes in spite of analysts anticipating that the U.S. Federal Reserve will lower interest rates this week, with the Fed expected to deliver a verdict on rates on Wednesday.

The Federal Reserve isn't the only central bank set to deliver verdicts on interest rate policy, with the United Kingdom, China, Japan, Taiwan, Brazil, Norway, Paraguay, Turkey, South Africa, Ukraine, Mongolia, Moldova, Indonesia, and Estwatini also scheduled to issue rates decisions this week.

Asian stock markets posted mixed performances, with the Shanghai Composite Index down 0.48%, and the Nikkei 225 dropping 0.68%. However, the South Korean Kospi index was up 0.13%, the Taiwanese Taiex bounced 0.24%, the Australian All Ordinaries gained 0.21%, and the Singaporean STI Index rallied 0.22%.

Most U.S. stocks are losing ground, with the S&P 500 down 0.24%, the Nasdaq 100 dipping 0.85%, although the Dow Jones Industrial Average gained 0.19%.