Bitcoin Outshines Ethereum Amid Trump Tariff Tensions

The recent tariff threats from President Donald Trump have reignited economic concerns between the U.S. and China, creating a market environment that has disproportionately benefited Bitcoin. As U.S. Treasury commentary suggested China’s economy was “weak” and both nations engaged in trade posturing, investors sought shelter from potential currency devaluation through what analysts call a “debasement trade.” Pedro Lapenta, head of research at crypto asset manager Hashdex, told Decrypt that Ethereum’s recent underperformance against Bitcoin “reflects shifting macro narratives more than fundamentals,” noting that “Bitcoin naturally captures that hedge demand first” during periods of economic uncertainty.

This pattern isn’t new to 2024 markets. Throughout most of April, when the Trump administration managed expectations around “reciprocal” tariffs, a single Bitcoin was worth at least 50 Ethereum, representing one of Bitcoin’s strongest periods against the smaller asset this year. At that time, Bitcoin was the only digital asset that appeared to benefit from perceived shifts in the global geopolitical order, with some analysts comparing its performance to gold. The current tariff tensions represent the second time this year that such macroeconomic factors have flared, creating a consistent pattern of Bitcoin outperforming during periods of heightened trade uncertainty.

Despite recent underperformance against Bitcoin, Ethereum’s fundamental case remains robust. At its weakest point this year, a single Bitcoin was worth just 23.7 Ethereum, which coincided with Ethereum’s climb to a new all-time high of $4,956 in August. According to Hashdex’s Lapenta, “the structural story for Ethereum remains strong, anchored in the rise of regulated stablecoins, tokenization, and institutional adoption of on-chain finance.” This underlying strength has allowed Ethereum to significantly outperform Bitcoin for much of 2024, even as it has lost some ground in recent weeks.

Juan Leon, senior investment strategist at Bitwise, pointed to specific crypto industry developments supporting Ethereum’s long-term prospects. He said Ethereum’s recent run stems from investor excitement toward the emergence of Ethereum treasury firms and the passage of stablecoin legislation. Along with a supportive regulatory environment, he said the setup “holds promise for an altcoin rally” into next year. These industry-specific factors, combined with Ethereum’s established role in decentralized finance, provide a counterbalance to the macroeconomic headwinds currently favoring Bitcoin.

The question of whether current market conditions could spark a sustained altcoin rally divides industry analysts. In market cycles past, Bitcoin’s peak has typically been followed by a period of strength for cryptocurrencies like Ethereum, often called an “altcoin season.” Bitwise’s Leon is among those who see potential for such a shift, citing the supportive regulatory environment and specific Ethereum-focused developments as catalysts that could drive broader altcoin performance into next year.

However, TD Cowen analyst Lance Vitanza expressed skepticism about the concept of an “altcoin season,” telling Decrypt that he’s “never been a believer in this or any ‘altcoin season,'” arguing that only a handful of tokens are likely to survive as legitimate technology. Despite this skepticism, Vitanza acknowledged that Ethereum “represents real technology” and is likely to play a meaningful role in decentralized finance, particularly through the potential tokenization of trillions of dollars in assets. He concluded that Ethereum “could appreciate meaningfully over time” even if he would “be surprised if the outperformance, if any, were to persist” more than a few months.

The divergence in analyst views reflects the complex interplay between macroeconomic factors, industry-specific developments, and the unique characteristics of both Bitcoin and Ethereum. While Bitcoin continues to benefit from its established role as a hedge against economic uncertainty, Ethereum’s value proposition rests on its utility in the evolving landscape of decentralized finance and asset tokenization. As trade tensions between the U.S. and China continue to evolve, along with Federal Reserve interest rate calculations and other macroeconomic factors, the relative performance of these two leading cryptocurrencies will likely continue to reflect both broader economic narratives and their distinct fundamental stories.