Bitcoin may be riding the ETF wave, but altcoins are where the rally really is 

Bitcoin and ether remained in positive territory on Wednesday afternoon, while altcoins sustained their dominance. Analysts suggest this may signal the onset of a period marked by a heightened appetite for risk.

Polygon (MATIC) and Chainlink (LINK) posted double digit gains Wednesday. Solana, which had previously been leading the rally, slowed to lose around 0.7% over the week. SOL remains up more than 85% over the past 30 days.

Leverage is up, analysts say, meaning traders are once again borrowing to make their investments. Binance this week launched a Tether earn product, promising lenders 13% annual percentage yields.

GMX with Arbitrum DAO on Wednesday launched an incentive program that could earn traders as much as 75% in annual yield on tokens such as Ripple (XRP) and Solana (SOL).

Traders are allocating more to smaller tokens, according to data from CoinShares. Last week, Solana clocked $11 million in inflows and Chainlink raked in $2 million, representing 17% of total assets under management.

For Solana, net buying has been led by Coinbase, with 2.2 million tokens market-purchased between Oct. 18 (the start of the rally) and Nov. 6, according to data from Kaiko. Investors also put money into Polygon and Cardano, which saw increased flows of $800,000 and $500,000, respectively, last week, CoinShares data shows.

Bitcoin continues to attract investors, buoyed by bond yields which have dipped recently but remain high. Noelle Acheson, author of the ‘Crypto is Macro Now’ newsletter, cites sustained enthusiasm for exchange-traded funds as a contributing factor.

“We can see that the BTC annualized daily basis on Binance is at its highest since the excitement surge of June, when BlackRock filed its spot BTC ETF proposal,” Acheson said. “It’s also worth looking at the BTC basis, which reflects the premium implicit in futures pricing and can be taken as a gauge of sentiment – a positive basis means traders are feeling optimistic that the price will rise.”

ETF optimism could be premature though, and yield-farming hype aside, a lot is still riding on macroeconomic conditions, Craig Erlam, senior analyst at Oanda said. Investors are battling hawkish commentary from central banks around the world, Erlam said, against downbeat economic expectations and speculation around rate cuts next year.

“Even if central banks were of the view that rates could fall next year, it would be unrealistic to expect them to say so at this stage as it would confuse and undermine their message that rates must stay higher for longer,” he added.

Futures markets are still overwhelmingly banking on the Fed holding rates where they are, with CME data pricing a 90% likelihood of a pause at the next policy-setting meeting in December.

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