ETH Outperforms BTC as Jackson Hole Sparks Fed Cut Repricing and Growth Headwinds Weigh on Bitcoin | Bitwise

André Dragosch, PhD Director, Head of Research — Europe

Ayush Tripathi Research Analyst

André Dragosch, PhD Director, Head of Research — Europe

Ayush Tripathi Research Analyst

Overview

Chart of the Week
Performance
Sentiment
Fund Flows
On-Chain
Futures, Options & Perpetuals
Bottom Line
Appendix

Last week, cryptoassets were supported by increasing prospects of monetary policy easing by the Fed. However, there was a high degree of performance dispersion again as Ether continued to outperform bitcoin.
Our in-house Cryptoasset Sentiment Index has rebounded from bearish readings and currently signals a neutral sentiment again.
Chart of the Week: The initial reaction of cryptoassets but also other traditional financial assets to Powell’s remarks was very positive as the speech was interpreted as relatively dovish and indicated an emphasis on weakening labour market dynamics rather than accelerating inflation dynamics by the Fed.

Chart of the Week

Performance

Last week, cryptoassets were supported by increasing prospects of US monetary policy easing by the Fed. However, there was a high degree of performance dispersion again as Ether continued to outperform bitcoin.

Many analysts have attributed this surge in cryptoassets to a renewed repricing in Fed rate cut odds which have temporarily surged above 90% for a 25 basis points cut in September. This repricing in Fed rate cut expectations is due to Powell's latest official statement at the economic symposium at Jackson Hole, Wyoming.

The initial reaction of cryptoassets but also other traditional financial assets to Powell's remarks was very positive as the speech was interpreted as relatively dovish and indicated an emphasis on weakening labour market dynamics rather than accelerating inflation dynamics by the Fed (Chart-of-the-Week).

However, some macro analysts have pointed out that the actual tone in the speeches given by Powell, Hammock, and Collins on that day was rather net hawkish based on natural language processing of those speeches. That being said, at the time of writing, Fed Funds Futures still price in a 86% chance of a Fed rate cut in September while Polymarket odds imply a 85% probability of a Fed rate cut of 25 bps or more.

It is important to note that our in-house macro factor model implies that a repricing of global growth expectations has been the key macro driver for bitcoin over the past 6 months and not changes in monetary policy expectations as highlighted here. More specifically, changes in global growth expectations have accounted for 78% of bitcoin's performance variation, based on our model. Global growth expectations have declined at the margin more recently which has weighed on bitcoin's performance in our view. Increasing Fed rate cut odds could also be related to the recent deceleration in global growth momentum, in particular in the US.

Furthermore, there has been renewed downside pressure more recently due to increased selling by a whale that liquidated more than 24k BTC – whales are defined as network entities that control at least 1,000 BTC. The recent downside moves were also amplified by an increase in long futures liquidations.

In this context, it is important to note that the general amount of profit-taking by whales has generally declined compared to the high levels in July this year. This implies that selling pressure has gradually abated.

Net flows into global cryptoasset ETPs have reversed but the positive spread between ETH and BTC has remained. ETH has generally remained more resilient than BTC following Powell's remarks at Jackson Hole which could be related to the fact that the EU and ECB are considering deploying the digital Euro Central Bank Digital Currency (CBDC) on either Ethereum or Solana.

Meanwhile, there has been some bullish news flow in terms of the sovereign adoption of bitcoin.

For instance, Brazil is holding a historic hearing on Bill 4501/24 - proposing a sovereign Bitcoin reserve (RESBit) up to $19 billion (5% of foreign reserves). Besides, Japan's finance minister has made favourable statements with respect to diversified investments into cryptoassets and a more favourable tax treatment. The country is planning to approve Bitcoin ETFs in 2026.

It seems as if the sovereign race for bitcoin is gradually heating up. Note that the BITCOIN Act of 2025 (S.954) remains at the introduced stage in the US. It has been referred to committee but has not progressed to hearings, markup, or floor votes. An acceleration of sovereign adoption elsewhere in the world could reaccelerate the legislative process in the US as well.

All in all, our general take is that bitcoin and other cryptoassets remain in a bull market as global money supply is bound to accelerate with renewed rate cuts from the Fed and a further reacceleration in US money supply growth.

In general, among the top 10 crypto assets Solana, Ethereum, and BNB were the relative outperformers.

Overall altcoin outperformance vis-à-vis bitcoin has remained high last week, with 85% of our tracked altcoins managing to outperform bitcoin on a weekly basis. Ethereum also continued to outperform bitcoin significantly last week.

Sentiment

Our in-house “Cryptoasset Sentiment Index” has rebounded from bearish readings and currently signals a neutral sentiment again.

At the moment, 6 out of 15 indicators are above their short-term trend.

The Altseason Index and the BTC 3m Basis showed very positive movements.

The Crypto Fear & Greed Index currently signals a “neutral” level of sentiment as of this morning. It briefly touched “Greed” levels on the 23rd of August before ending the week at a reading of 47.

Performance dispersion among cryptoassets remained relatively stable last week, signalling that altcoins have continued to be highly correlated with the performance of bitcoin the exception of some crypto assets such as Ethereum.

Altcoin outperformance vis-à-vis Bitcoin has increased from last week, with around 85% of our tracked altcoins managing to outperform Bitcoin on a weekly basis. Ethereum also managed to outperform Bitcoin last week.

In general, increasing (decreasing) altcoin outperformance tends to be a sign of increasing (decreasing) risk appetite within cryptoasset markets and the latest altcoin outperformance signals a increasing risk appetite at the moment.

Sentiment in traditional financial markets as measured by our in-house measure of Cross Asset Risk Appetite (CARA) had decreased slightly, moving from 0.70 to 0.66.

Fund Flows

Weekly fund flows into global crypto ETPs flipped negative last week, potentially due to the actual tone in the speeches given by Powell, Hammock, and Collins being rather net hawkish based on natural language processing of those speeches.

Global crypto ETPs saw around -1,543.0 mn USD in weekly net outflows across all types of cryptoassets, after +3,765.1 mn USD in net inflows the previous week.

Global Bitcoin ETPs have experienced net outflows totalling -1,091.8 mn USD last week, of which -1,178.5 mn USD in net outflows were related to US spot Bitcoin ETFs.

The Bitwise Bitcoin ETF (BITB) in the US experienced net outflows, totalling -60.8 mn USD last week.

In Europe, the Bitwise Physical Bitcoin ETP (BTCE) experienced minor net inflows equivalent to +1.4 mn USD, and the Bitwise Core Bitcoin ETP (BTC1) experienced minor net inflows of +1.7 mn USD.

The Grayscale Bitcoin Trust (GBTC) has posted net outflows of -118.1 mn USD. The iShares Bitcoin Trust (IBIT), also experienced strong net outflows of around -615.0 mn USD last week.

Meanwhile, flows into global Ethereum ETPs also flipped negative last week, reaching around -441.9 mn USD in net outflows.

US spot Ethereum ETFs, also recorded net outflows of around -237.7 mn USD on aggregate. The Grayscale Ethereum Trust (ETHE), has posted net outflows of -89.0 mn USD.

However, the Bitwise Ethereum ETF (ETHW) in the US has posted minor net inflows of +2.5 mn USD.

In Europe, the Bitwise Physical Ethereum ETP (ZETH) saw minor net outflows of -7.3 mn USD while the Bitwise Ethereum Staking ETP (ET32) had sticky AuM (+/- 0 mn USD)..

Altcoin ETPs ex Ethereum experienced minor net inflows of +0.3 mn USD last week.

However, thematic & basket crypto ETPs continued to be out of favour with net outflows of around -9.7 mn USD on aggregate last week. The Bitwise MSCI Digital Assets Select 20 ETP (DA20) had sticky AuM (+/- 0 mn USD).

Global crypto hedge funds exposure to Bitcoin has increased last week. The 20-days rolling beta of global crypto hedge funds' performance to Bitcoin increased to around 0.61 per yesterday's close, up from 0.56 from the week before.

On-Chain Data

Last week, Bitcoin's on-chain activity remained relatively uneventful last week.

Net buying volumes on bitcoin spot exchanges over the past 7 days continued to be negative and accelerate with net selling volumes increasing to approximately -$1.39 bn on bitcoin spot exchanges.

We also see a similar trend when looking at bitcoin whales (entities that hold atleast 1k Bitcoin), as the have started to send bitcoins to exchanges on a net basis, indicating an increase in whale selling pressure. More specifically, BTC whales sent +12,535 BTC to exchanges last week. This tends to put downward pressure on prices.

Furthermore, based on recent data from Glassnode, the overall downward trend in exchange-held Bitcoin reserves has reversed slightly higher. The current level stands at 2.924 million BTC, representing approximately 14.7% of the total circulating supply, a 20bp increase from last week.

It's worth noting that the 30-day measure of “apparent demand” for Bitcoin remained positive, however, continued to decelerate over the past week. This is signalling a decreased interest of short-term holders (read “retail investors”) as well.

All in all, on-chain metrics have weakened week on week and still has room to the upside as bitcoin and other cryptoassets remain in a bull market as global money supply is bound to accelerate with renewed rate cuts from the Fed and a further reacceleration in US money supply growth..

Futures, Options & Perpetuals

Last week, BTC futures open interest increased last week by +21.4k BTC across all exchanges, and decreased by -3.4k BTC on CME. Meanwhile, perpetual open interest increased by around +20.6k BTC.

BTC perpetual funding rates continued to remain positive and upward trending last week indicating a bullish sentiment among traders in the perpetual futures market and a long bias.

In general, when the funding rate is positive (negative), long (short) positions periodically pay short (long) positions, which is indicative of bullish (bearish) sentiment.

The BTC 3-months annualised basis increased significantly last week to around 8.8% p.a., averaged across various futures exchanges.

BTC option open interest increased by around +25.5k BTC while the put-call open interest ratio decreased slightly to 0.62. We observed some significant spikes in the put-call volume ratio indicating an increasing appetite for downside protection last week.

Meanwhile, the 1-month 25-delta skew for BTC decreased throughout the week from +15.1% to +7.4%. The presence of a positive skew indicates some preference for downside protection. The recent downside moves were also amplified by routine long futures liquidations, including yesterday's 1,585 BTC which matched levels from August 1st.

BTC option implied volatilities decreased slightly compared to last week.At the time of writing, implied volatilities of 1-month ATM Bitcoin options are currently at around 33.2% p.a. on Deribit.

Bottom Line

Last week, cryptoassets were supported by increasing prospects of monetary policy easing by the Fed. However, there was a high degree of performance dispersion again as Ether continued to outperform bitcoin.
Our in-house Cryptoasset Sentiment Index has rebounded from bearish readings and currently signals a neutral sentiment again.
Chart of the Week: The initial reaction of cryptoassets but also other traditional financial assets to Powell’s remarks was very positive as the speech was interpreted as relatively dovish and indicated an emphasis on weakening labour market dynamics rather than accelerating inflation dynamics by the Fed.

Appendix

Important information:

This article does not constitute investment advice, nor does it constitute an offer or solicitation to buy financial products. This article is for general informational purposes only, and there is no explicit or implicit assurance or guarantee regarding the fairness, accuracy, completeness, or correctness of this article or the opinions contained therein. It is advised not to rely on the fairness, accuracy, completeness, or correctness of this article or the opinions contained therein. Please note that this article is neither investment advice nor an offer or solicitation to acquire financial products or cryptocurrencies.

Before investing in crypto ETPs, potentional investors should consider the following:

Potential investors should seek independent advice and consider relevant information contained in the base prospectus and the final terms for the ETPs, especially the risk factors mentioned therein. The invested capital is at risk, and losses up to the amount invested are possible. The product is subject to inherent counterparty risk with respect to the issuer of the ETPs and may incur losses up to a total loss if the issuer fails to fulfill its contractual obligations. The legal structure of ETPs is equivalent to that of a debt security. ETPs are treated like other securities.

About Bitwise

Bitwise is one of the world’s leading crypto specialist asset managers. Thousands of financial advisors, family offices, and institutional investors across the globe have partnered with us to understand and access the opportunities in crypto. Since 2017, Bitwise has established a track record of excellence managing a broad suite of index and active solutions across ETPs, separately managed accounts, private funds, and hedge fund strategies—spanning both the U.S. and Europe.

In Europe, for the past four years Bitwise (previously ETC Group) has developed an extensive and innovative suite of crypto ETPs, including Europe’s largest and most liquid bitcoin ETP.

This family of crypto ETPs is domiciled in Germany and approved by BaFin. We exclusively partner with reputable entities from the traditional financial industry, ensuring that 100% of the assets are securely stored offline (cold storage) through regulated custodians.

Our European products comprise a collection of carefully designed financial instruments that seamlessly integrate into any professional portfolio, providing comprehensive exposure to crypto as an asset class. Access is straightforward via major European stock exchanges, with primary listings on Xetra, the most liquid exchange for ETF trading in Europe.

Retail investors benefit from easy access through numerous DIY/online brokers, coupled with our robust and secure physical ETP structure, which includes a redemption feature.

ETH Outperforms BTC as Jackson Hole Sparks Fed Cut Repricing