coindesk.com
Crypto markets extended gains on Wednesday as traders digested a mix of political tailwinds, dovish Fed expectations, and ongoing ETF inflows into ether ($ETH).
Altcoins added to their rally during late Tuesday U.S. afternoon hours after Treasury Secretary Scott Bessent suggested the Federal Reserve should consider a 50 basis point rate cut at its upcoming September meeting.
Ether extended a strong week with gains of nearly 30%, nearing fresh highs that has historically preceded rotations and market frenzy in altcoins and microcap tokens.
ETFs tied to the token registered $520 million in positive flows on Tuesday, data shows, on track to reach over $2 billion in weekly flows for the first time.
Bitcoin remained steady just under $120,000. Solana’s $SOL ($SOL) surged 12% to $198, $BNB Chain’s $BNB ($BNB) added 5% to $837, and XRP gained 4% to $3.25. Dogecoin and Cardano rose over 8%, continuing a tendency of following $ETH price action.
Traders say recent comments from U.S. President Donald Trump fueled sentiment after ordering regulators to “look into” the possibility of adding crypto — alongside private equity — to U.S. 401(k) retirement plans.
While this prospect is currently exploratory, the possibility of retirement accounts gaining direct exposure to crypto would represent a significant structural shift in demand.
“Ethereum has been the standout, with mainstream equity analysts now joining the FOMO trade,” said Augustine Fan, head of insights at SignalPlus, in a Telegram message. “$BTC implied volatility remains near all-time lows while $ETH’s short-dated vol has jumped materially — that’s a sign traders see more upside and near-term action in $ETH.”
Implied volatility (IV) is the market’s forecast of how much a crypto’s price might move in the future, based on options prices. If IV is low, traders aren’t expecting big swings and if it’s high, they’re bracing for bigger moves.
Short-dated volatility refers to the implied volatility of options that expire soon, typically within days or weeks. This reflects expectations for near-term price action rather than the long-term outlook.
In this case, $BTC’s IV is near record lows, indicating that traders expect its price to remain relatively stable. $ETH’s short-dated volatility is jumping, which suggests that traders expect larger near-term price swings — and probably more upside — in $ETH compared to $BTC.
Rate-cut bets added fuel to the move. Markets now price a high likelihood of the Federal Reserve lowering rates before year-end, easing macro headwinds for risk assets.
“Ethereum’s breakout past $4,600 reflects growing confidence in its institutional adoption,” said Nick Ruck, director at LVRG Research, told CoinDesk.
“Bitcoin holding near $119,000 shows resilient demand. A dovish Fed pivot could further accelerate $ETH’s outperformance, especially with ETF speculation and scaling upgrades ahead,” Ruck added.
Meanwhile, FxPro’s Alex Kuptsikevich noted the rally is unusual in that altcoin strength appears to be pulling $BTC higher, not the other way around.
“Bitcoin is testing historical highs above $122,000 with the next major target at $135,000-$138,000. Ethereum is now in striking distance of its all-time high above $4,800,” he said.