Ethereum (ETH) started the year strong, but began to decline in mid-March. However, altcoins began to gain momentum in mid-May amid expectations of approval of a spot Ethereum exchange-traded fund (ETF) in the United States.
ETH has been overtaking Bitcoin (BTC) since January 1, but has surpassed the flagship cryptocurrency since the spot Ether ETF received official approval from the Securities and Exchange Commission on May 23.
Since May 15, ETH has surged around 30% compared to BTC’s 9% rise in each US dollar pair.
There are three main reasons why ETH is outperforming BTC over the past few days, including increased network activity and growing interest in the launch of a spot Ether ETF.
Over the past 10 days, ETH has been trending upward against BTC.
Ethereum is up 23% over the past 10 days, outperforming Bitcoin and other top layer 1 tokens. While the price of BTC is up only 2% over the past 30 days, other top-cap layer 1 tokens such as BNB Chain’s BNB (BNB) and Solana’s SOL (SOL) are up 3.35% and 1%, respectively, over the past 30 days. Same time zone.
The ETH/BTC ratio began rising on May 17 and reached a two-week high of $0.05854 on May 23, up 31%.
From a technical perspective, the ETH/BTC weekly chart shows a bullish divergence from the Relative Strength Index, suggesting that “a trend reversal has begun,” as observed by Michaël van de Poppe, trader and founder of MN Trading. This ratio is considered bullish as long as the ratio remains above 0.051.
“ETH is ridiculously undervalued,” declared pseudonymous analyst Plazma in a May 31 post on added.
Increased on-chain activity supports Ether’s outstanding performance
Ethereum’s network activity and scaling solutions contribute to its performance. Data from DappRadar shows a 7.75% increase in trading volume among Ethereum’s top decentralized applications (DApps) last week, driven by declines in Uniswap, Eigenlayer, MetaMask, and Banana Gun. The number of unique smart contracts on Ethereum also increased from 37,870 on May 20 to 38,066 on May 31, according to CryptoQuant.
Additional data from CryptoQuant shows that Ethereum’s network activity has increased over the past seven days.
A spot Ether ETF could launch in June.
In addition to strengthening on-chain metrics, the possibility of an Ether ETF soon debuting on the market is strengthening ETH’s bullish momentum and boosting its bullish stance against Bitcoin.
Bloomberg senior ETF analyst Eric Balchunas believes there is a “legitimate possibility” that these investment products will launch by the end of June after BlackRock updates key filings needed for launch.
BlackRock has updated its Form S-1 for iShares Ethereum Trust (ETHA) with the SEC, nearly a week after the regulator approved its 19b-4 filing.
Blachunas said there would likely be another filing to “fine-tune” the SEC opinion, but “a late June launch is a legitimate possibility.” But he maintained approval was likely around July 4, adding that early approval would be “hopeful.”
Fellow Bloomberg ETF analyst James Seyffart said BlackRock’s updated S-1 “is almost certainly the engagement we were looking for.”
The issuer and the SEC are working to launch a spot Ethereum ETF.
Market participants are optimistic that spot Ether ETFs will see ETH reach new highs. Some are speculating that Wall Street will use this 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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