Ethereum (ETH) is gaining momentum in the volatile cryptocurrency market, outperforming its long-time rival Bitcoin (BTC). According to Kaiko dataThe ETH/BTC ratio has been steadily rising, rebounding from multi-year lows.
ETH/BTC ratio rises, ETH momentum builds
The ETH/BTC ratio technically measures market sentiment for these two major cryptocurrencies. The recent rebound indicates that investors are increasingly optimistic about Ethereum’s potential compared to Bitcoin.
This upward trajectory has been fueled by growing optimism surrounding the possible approval of a spot Ethereum ETF and a general confidence that the market will rise further in 2024. The prospect of this product entering the market has injected fresh energy into the ETH ecosystem, boosting it to the second most valuable coin by market capitalization.
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After a prolonged period of lows, the ETH/BTC ratio began to rise shortly after the U.S. Securities and Exchange Commission (SEC) approved 11 spot Bitcoin ETFs last week. Analysts say this unexpected change is mainly due to growing confidence in the SEC approving similar products for ETH.
A spot Ethereum ETF with direct exposure to the Ethereum market would make it easier for institutional investors to benefit from ETH’s volatility. So far, the SEC has approved an Ethereum futures ETF that, unlike spot ETFs, tracks an index rather than the direct price of this asset.
Blackrock is one of the major Wall Street giants interested in issuing a spot Ethereum ETF. Given its history of success, the decision of one of the world’s leading asset managers to apply for this product is an endorsement of its prospects. Previously, BlackRock CEO Larry Fink said that Ethereum could lead the tokenization drive in the coming years despite scalability issues.
The US SEC has not yet clarified whether Ethereum is a commodity or a security.
Nonetheless, the SEC has not yet clarified whether ETH, a coin pre-mined as part of the assets distributed by the Ethereum Foundation, is a commodity like Bitcoin. Earlier, SEC Chairman Gary Gensler was cornered by US policymakers to clarify the SEC’s position, but he did not do so.
Nonetheless, with the discovery of the Ethereum ETF and the prospect of Ethereum’s dominance in decentralized finance (DeFi) and non-fungible tokens (NFTs), ETH is likely to continue to outperform BTC in the coming months. Price action data shows that ETH is already up 20% against BTC over the last trading week.
Featured image from Canva, chart from TradingView
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