Ethereum Battles Bitcoin for Wall Street Whales

Bitcoin’s little sibling ethereum is stealing the spotlight lately, climbing more than 30% year to date as of yesterday afternoon to outperform its No. 1 crypto rival.

Both of the two biggest cryptos surged on Friday after Federal Reserve Chair Jerome Powell hinted at a September rate cut. Bitcoin rallied above $112,000, and ether hit an all-time high above $4,800.

But bitcoin rapidly cooled over the weekend as investors reined in their rate-cut hype and some shuffled their crypto portfolios in favor of ethereum. By Sunday, ether broke past $4,900 before cooling off on Monday. Bitcoin, meanwhile, “flash-crashed” below $112,000. At one point, it lost nearly $2,000 in about 20 minutes because, well, that’s crypto. 

Trying to Speak Whale

Investors have been playing Dory all weekend, trying to understand what big-time crypto investors, a.k.a whales, are saying with their recent money moves. Some X users blamed one whale for triggering bitcoin’s drop by rapidly selling off 24,000 bitcoin within days. But multiple whales could be swimming in the same direction: Analytics firm Lookonchain reported Friday that it found a wallet that recently sold more than 100,000 bitcoin and bought more than 60,000 ether.

When one whale moves, let alone multiple whales, it can cause massive ripples:

• That’s in part because investors have automated trades set up to sell off tokens that hit a certain price; these trades are executed quickly and around the clock. Not to mention crypto’s ultra-online nature makes it inherently sensitive to rumors and hype: Remember the impact one post from Elon Musk has on dogecoin. 
• While bitcoin still dominates crypto markets, ether has been nibbling at its market share. Ether caught investors’ interest this year because its native blockchain is the go-to for tokenized assets like stablecoins, which major financial institutions and regulators are embracing. 

Second Best: Ether’s an institutional fave right now, and its recent mainstream-ization may set it apart from other cryptocurrencies as an option that seems less risky. Ether could also benefit from being smaller than bitcoin: Some analysts say its smaller market cap means more upside for investors. But skeptics say ether’s not protected from the same pressures that pushed down on bitcoin over the weekend, and when investors want to de-risk away from crypto, ether isn’t an exception. The coin’s Monday cool-off could be proof of that — or just the start of a new cycle for the coin as it meets resistance around $5,000.