Ethereum outpaces Bitcoin in Q3 – Can ETH lead the next altcoin season?

The market is showing textbook signs of an altcoin cycle.

From a technical perspective, Bitcoin dominance has once again failed to break through the 60% level. Macro sentiment isn’t helping either, as macro FUD is beginning to resurface. Notably, the 30-year Treasury yield climbed to a 19-year peak due to inflation and deficit worries.

Normally, higher yields make Treasury bonds more attractive to investors, which means the return of capital to the safe haven decreases the amount of risk-taking capital in the crypto market, further pressuring Bitcoin dominance. This naturally sets the stage for the next potential surge in Ethereum’s favor.

As depicted by the chart above, Ethereum’s dominance is taking an opposite course in contrast to Bitcoin’s dominance. Specifically, ETH’s dominance in the crypto market has already crossed more than 13% this Q3, while Bitcoin’s dominance is increasing at a much slower pace, with the growth of around 1.5%.

Meanwhile, the same data is reflected in crypto asset prices via data provided by CoinGlass. According to the data, ETH price appreciated by over 20% in Q3 thus far, while Bitcoin returned around 9%. Therefore, it is possible to conclude that Ethereum [ETH] is substantially outperforming Bitcoin [BTC] on a quarterly basis, with more than 2x higher returns.

So, if macro FUD pressure persists in the crypto market, there is a plausible scenario where capital rotations into Ethereum will accelerate, which would provide further validation for the Altcoin Season Index to enter official altseason. Notably, one of the largest banks in the world, Bank of America, could be one of the catalysts for acceleration in rotation into altcoins.

Ethereum takes the lead in altcoin rotation

Altcoin seasons have been historically correlated with capital inflows into Ethereum.

Therefore, it is not surprising that traders wonder if the same pattern is about to unfold again. While ETH/BTC is still below 0.03, the pairing’s quarterly gain of 11% equals Ethereum’s strong technical performance.

Thus, the potential breakout of the ETH/BTC ratio can’t be ruled out, especially in the context of Bank of America’s recent actions. The bank sold off almost 70% of its MSTR shares during Q2, cutting the position’s size from 3.97 million to 1.18 million shares.

At the same time, the institution bought 29x more BlackRock ETHA shares. This raised the position from 67,500 to 1.98 million shares. As of now, the bank’s ETHA position is worth $23.6 million.

Simply put, one of the world’s largest banks is clearly repositioning its crypto-related portfolio, shifting assets from one Bitcoin fund to another Ethereum ETF.

Ethereum’s outperformance, therefore, may not be driven by rotational flows alone. Instead, institutional positioning is also playing a key role, adding fuel to the ETH/BTC ratio as it eyes a breakout above resistance. If the ratio breaks out, it could open the door to a broader altcoin rally.

Taken together, macro FUD, Bitcoin supply pressure, and technical underperformance already suggest that such a scenario may already be unfolding. With that said, Ethereum could lead the ration, with Bank of America’s move serving as a key case study.