Ramazan Eles 
Bitcoin and altcoins have been trending downwards for quite some time. Despite a sharp decline at the beginning of August, BTC has struggled to stay above $60,000 since then.
As we await a potential recovery in Bitcoin and altcoins, Grayscale Research has provided a fresh analysis.
Grayscale notes that August has been particularly volatile for the cryptocurrency market. The firm points out that amidst this volatility, Bitcoin has benefited from a weakening dollar and signals of potential interest rate cuts.
According to Grayscale’s report, while Bitcoin has shown better performance, Ethereum (ETH) has lagged behind.
The report also highlights that Federal Reserve Chair Jerome Powell signaled potential upcoming interest rate cuts during the Jackson Hole meeting at the end of August, which could benefit Bitcoin.
“In our view, continued dollar weakness and lower interest rates would be favorable for Bitcoin’s valuation.”
Ethereum Underperforms Compared to Bitcoin
The report reveals that while Bitcoin experienced a moderate decline of -8.5%, Ethereum saw a more significant drop of -21.8%, making it one of the lower-performing assets on a risk-adjusted basis.
This drop is attributed to Ethereum’s uncertain scaling strategy and numerous speculative positions.
“Ethereum significantly underperformed during the early August decline and did not recover substantially later in the month.”
Grayscale Research believes that the current market pessimism surrounding Ethereum is unwarranted, considering that its scaling strategy is clearly effective. However, it may take some time for the market sentiment towards ETH to improve.
Two Altcoins Stand Out
Grayscale Research analysts point out that some altcoins performed positively in August, distinguishing themselves from the broader market. Notable examples include ZCash (ZEC) and AAVE.
“For instance, ZCash (ZEC) gained 29.5% in mid-August before pulling back later in the month. AAVE also saw a 21% increase.”
The Major Selling Pressure on Bitcoin Has Eased
Finally, Grayscale Research mentions that the substantial selling pressure from the German government, Mt. Gox repayments, and other events has largely diminished, and they believe that Bitcoin’s price will continue to rise.
“Stable U.S. labor market data, potential Fed rate cuts, and evolving policies around the U.S. crypto industry could allow Bitcoin to test all-time highs later this year.”
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