#Altcoins Rally#  Ethereum surpasses Solana in capital inflows: ETH is racing towards $4,000.

Capital rotation is supporting Ether, while Solana has fallen to a yearly low.

ETH futures are gaining dominance as open interest reaches $58 billion.

Low funding rates and strong spot accumulation support ETH's target of $4,000.

Capital flow favors Ethereum over Solana

Ether (ETH) has emerged as the primary beneficiary of the capital rotation in the altcoin market.

Data shows that SOL/ETH, a measure of short-term capital movement, has fallen 42 percent since April, falling to a yearly low of 0.045.

This suggests that while there were inflows into ETH and SOL in July, capital flows are now favoring Ether.

It indicates which asset is favored by short-term speculators. With the ETH/SOL trading pair in a multi-month downtrend, data suggests a "decreasing but notable ETH-led rotation."

Another positive sign for Ether is that the ETH/BTC pair broke above its 200-day exponential moving average for the first time in over two years, reaching multi-month highs again.

While the ETH price has returned to its average trading range, Bitcoin continues to face intense selling pressure at $116,000 and below.

Ether funding rates remain low

Ether's open interest recently reached an all-time high of $58 billion. This OI increase, coupled with Ethereum's record daily transaction count, reflects increased capital entering the market and increasing network participation.

Furthermore, Ethereum's share of total open interest on major exchanges increased to 34.8%, while Bitcoin's share decreased from 59.3% to 47.1%.

However, while ETH has yet to reclaim the key $4,000 resistance level, futures funding rates suggest the rally could continue.

Current total funding rates remain significantly lower than previous attempts at $4,000 in March and December 2024. In fact, compared to March, funding rates have nearly halved.

This dynamic is positive for two key reasons: First, low funding rates indicate that investors are not overleveraging long positions, reducing the risk of sudden liquidations.

Second, it suggests that the current price action is driven by spot demand (led by Ether treasury companies) rather than excessive speculative positions.

ETH treasury companies and spot ETH ETFs have each purchased approximately 1.6% of the total available ETH supply since early June.

The price of Ether has corrected 9.72% in the last seven days after rising for five consecutive weeks. ETH then quickly recovered 9% to retest $3,800 on Thursday.

While targeting $4,000, this psychological level "always acts as resistance," it appears.

"Once broken, I don't think we'll fall below it again anytime soon. Price discovery is imminent."