Ethereum’s price has shown remarkable strength against Bitcoin as investors anticipate the launch of a spot ETH ETF in the United States.
Starting the year strong, Ethereum (ETH) experienced a dip in mid-March but regained momentum in mid-May. This resurgence is largely due to the expected approval of spot Ethereum ETFs by the U.S. Securities and Exchange Commission (SEC).
Since the SEC‘s approval on May 23, ETH has outperformed Bitcoin (BTC), with a 30% increase compared to Bitcoin‘s 9% gain in their respective USD pairs since May 15.
There are three main reasons why ETH has been outperforming BTC recently: increased network activity, excitement around the launch of spot Ethereum ETFs, and technical indicators suggesting a bullish trend.
ETH Trends Higher Against BTC
In the past 10 days, ETH has surged 23%, outpacing Bitcoin and other major cryptocurrencies. While Bitcoin has only risen 2% over the last month, other top-layer-1 tokens like Binance Coin (BNB) and Solana (SOL) have seen modest gains of 3.35% and 1%, respectively.
The ETH/BTC ratio has been on the rise since May 17, reaching a two-week high of 0.05854 on May 23, marking a 31% increase. According to Michaël van de Poppe, a trader and founder of MN Trading, the ETH/BTC weekly chart shows a bullish divergence in the relative strength index, indicating a potential trend reversal. This ratio remains bullish as long as it stays above 0.051.
Pseudonymous analyst Plazma noted on X (formerly Twitter) that “ETH is absurdly undervalued,” predicting the ETH/BTC ratio will hit 0.1 within a few months, meaning “10 ETH will be equal to 1 BTC.”
Increasing On-Chain Activity
Ethereum‘s network activity and scaling solutions are also driving its outperformance. Data from DappRadar indicates a 7.75% increase in transaction volume among top Ethereum DApps over the past week. Platforms like Uniswap, Eigenlayer, MetaMask, and Banana Gun have contributed to this growth. Additionally, the number of unique smart contracts on Ethereum rose from 37,870 on May 20 to 38,066 on May 31, according to CryptoQuant.
Anticipation of Spot Ether ETFs
The potential launch of spot Ether ETFs is another factor boosting ETH‘s price. Bloomberg Senior ETF analyst Eric Balchunas suggests that these ETFs could launch by late June, following updates to BlackRock‘s key filing with the SEC.
Balchunas believes there is a “legit possibility” of an end-of-June launch, although he estimates the odds for approval around July 4. Fellow Bloomberg analyst James Seyffart supports this view, noting that issuers and the SEC are actively working towards the launch of spot Ethereum ETFs.
Market participants are optimistic, with some speculating that Wall Street’s interest in Ethereum ETFs could drive ETH to new highs. There is even speculation that ETH‘s price could reach $10,000 in this cycle as institutional capital flows into these new investment products.
Summary Review: Ethereum‘s strong performance against Bitcoin is driven by increased network activity, technical bullish indicators, and the anticipated launch of spot Ethereum ETFs, all contributing to a positive outlook for ETH.
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