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 (BTC) 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 (XRP) gained 4% to $3.25. Dogecoin (DOGE) and Cardano (ADA) 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.