3 reasons why the price of Ethereum remains strong against Bitcoin
Ether (ETH) had a strong start to the year but began to taper off in mid-March. However, the altcoin began to recover in mid-May, pending the approval of spot ether exchange-traded funds (ETFs) in the United States.
Although ETH has trailed Bitcoin (BTC) since January 1, Ether ETF outperformed the major cryptocurrency after receiving official approval from the Securities and Exchange Commission on May 23.
Since May 15, ETH has gained about 30% in its respective US dollar pairs compared to BTC's 9% gain.
There are three main reasons why ETH has outperformed BTC over the past several days, including the growth of network activity and excitement over the launch of the SpaceEther ETF.
ETH has trended higher against BTC over the past 10 days.
Ether is up 23% in the last 10 days, outperforming Bitcoin and other top tier-1 tokens. The price of BTC is up just 2% over the past 30 days, while other high-cap layer-1 tokens, such as BNB Chain's BNB (BNB) and Solana's SOL (SOL), are up 3.35% and 1%, respectively. Same time frame.
The ETH/BTC ratio started to rise on May 17, and on May 23, a 31% increase, reached a two-week high of $0.05854.
From a technical point of view, the weekly chart of ETH/BTC has shown a bullish divergence from the relative strength index, which “started a trend reversal” as observed by trader and MN Trading Michael van de Pop. As long as the ratio is above 0.051, this ratio is considered bullish.
“ETH is incredibly undervalued,” pseudoanalyst Plasma said in a May 31 statement on X, saying that the ETH/BTC ratio will reach 0.1 in a few months and that “10 ETH will be equal to 1 BTC.”
The increased activity on the chain supports the performance of Ether
Ethereum's network activity and measurement solutions contribute to its performance. Data from Dapradar shows a 7.75% increase in transaction volume among top Ethereum decentralized applications (DApps) last week, fueled by declines in Uniswap, Eigenlayer, MetaMask, and Banana Gun. The number of unique smart contracts on Ethereum rose from 37,870 on May 20 to 38,066 on May 31, according to CryptoQuant.
Additional data from CryptoQuant shows that activity on the Ethereum network has increased over the past seven days.
The SpotEther ETF may launch in June.
In addition to strengthening on-chain benchmarks, the likelihood of Ether ETFs launching their markets soon is increasing due to ETH's maturity and strength against Bitcoin.
Eric Balchunas, senior ETF analyst at Bloomberg, believes these investment products have a “legitimate chance” to launch by the end of June after BlackRock updates the key filing needed to launch.
BlackRock has updated its S-1 filing with the SEC for iShares Ethereum Trust (ETHA).
Blachunas said another round of “fine-tuning” could be SEC comments, but “end of June launch [is] A legal possibility,” however, he put the chances of approval around July 4, adding that approval earlier would be a “long shot.”
Bloomberg ETF analyst James Seifert said BlackRock's updated S-1 is “really the engagement we want.”
“Providers and SEC Working to Launch Ethereum ETF.”
Market participants are optimistic that ETH will reach new highs as some speculative Wall Street traders use Ether ETFs as a bet on Web3's growth. Others speculate that the price of ETH could reach $10,000 this cycle as institutional capital flows into Ether ETFs.
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