Why Ethereum, Bittensor, and Arweave Are Rising Today

Several cryptocurrencies, including some of the first ever created and new altcoins, continued their ascent today following the Federal Reserve’s 50 basis points cut to interest rates last week, which many view as a positive catalyst for the sector.

The price of the world’s second-largest cryptocurrency Ethereum (ETH 2.95%) traded 4.4% higher, hovering around $2,358. Meanwhile, several altcoins also surged this morning, with the price of Bittensor (TAO 14.46%) and Arweave (AR 12.69%) up 17.4% and nearly 16%, respectively.

Capitulation for Ethereum?

In general, most cryptocurrencies are benefiting from the recent 50 bps rate cut. That’s because lower interest rates not only make riskier assets more appealing but lower interest rates typically result in a weaker U.S. dollar, an environment that cryptocurrencies have generally performed well in.

The outperformance of Ethereum may have to do with the fact that it has had more divergence lately against Bitcoin (BTC 0.25%), the world’s largest cryptocurrency. As you can see, Ethereum has significantly underperformed Bitcoin this year.

Ethereum Price data by YCharts

But this divergence may soon be coming to an end, according to the popular crypto trader Benjamin Cohen. Cohen, in a YouTube video to his more than 800,000 subscribers, said that based on charting and what’s happened in past years when the prices of Bitcoin and Ethereum have separated, a reversal could be on the horizon. Cohen also acknowledged that it’s impossible to call when an asset will bottom or peak.

“They don’t all have to happen at the same time and I think that’s what a lot of people might forget is that some assets will bottom out against Bitcoin well before other assets bottom out against Bitcoin and all I know right now is that it looks like ETH/BTC is in its final stages of capitulation,” he said.

In other news, altcoins like Bittensor and Arweave appear to be breaking out on positive comments on artificial intelligence from presidential candidate Kamala Harris. Bittensor is a decentralized network designed for the sharing of machine learning and artificial intelligence models. Essentially, the network serves as a growing library of AI models that rewards people for contributing knowledge. Arweave is a decentralized network that aims to offer permanent file storage for one upfront fee. In recent months, a new AI protocol was built on Arweave’s network-enabled AI applications to operate within smart contracts on the network.

Recently, Harris issued some of her first comments on crypto and AI:

VP Harris’ first comments on crypto as Dem nominee: “To build that opportunity economy, I will bring together labor, small business, founders and innovators and major companies. We will partner together to invest in America’s competitiveness, to invest in America’s future. We…

— Jennifer Epstein (@jeneps) September 22, 2024

Watching the regulatory landscape

Investors are always assessing the regulatory landscape for crypto and AI, given how new the technologies are. There have already been several big battles between the crypto community and regulators, which creates uncertainty, and new AI regulations are all but a certainty.

Ultimately, I do like Ethereum and think investors can hold the asset in their portfolios, given its proven longevity and the technology behind the network. Ethereum is also much more liquid now given the launch of spot Ethereum exchange-traded funds. However, I would caution investors from investing in other altcoins. While I think both Bittensor and Arweave are cool and interesting projects, they can be even more volatile than more traditional cryptocurrencies like Ethereum and are currently very speculative.