The cryptocurrency market in 2023-24 has seen a change from its usual patterns in the ratio between Ethereum (ETH) and Bitcoin (BTC). This ratio is a crucial measure of how money moves around and investors’ appetite for risk in the market.
Despite the start of a bullish trend towards the end of 2022, the ratio between ETH and BTC has been unexpectedly dropping. Experts believe that two main factors are contributing to this weaker performance.
Unpredicted ETH/BTC Ratio Decline
As per a recent report by Glassnode and CME Group, the approval of Bitcoin ETFs in the US in January 2024 has significantly increased the demand for Bitcoin, pushing its price higher.
Additionally, the competition among Proof-of-Stake (PoS) blockchains has been putting pressure on Ethereum, challenging its leadership in key areas such as liquidity, attracting investment, user experience, and, notably, scalability.
Despite the current situation, experts from Glassnode and CME Group anticipate a shift in this dynamic once spot Ether ETFs are introduced in the US, potentially reversing the current downtrend.
Investors are eagerly awaiting the launch of Ethereum ETFs. Several major asset managers, including VanEck, Grayscale, Fidelity, BlackRock, 21Shares, Franklin Templeton, and Bitwise, have submitted updated spot ETH ETF S-1 registration documents with the US Securities and Exchange Commission (SEC) this week.
The SEC has set a deadline of July 8 for issuers to submit their revised applications. It is hoped that the SEC will approve these applications within the next two weeks, given that issuers have made substantial progress in meeting all requirements.
It should be noted that while the SEC greenlit issuers’ spot ETH ETF 19b-4 applications on May 23, approval of their S-1 filings is still needed for trading to commence.
Ethereum’s Key Metrics Analysis
Despite the challenges, Ethereum has managed to hold above the $3,000 mark, which has boosted market sentiment.
Recent data indicates that Ethereum is nearing a potential bottom, reflected in the Ethereum Realized Cap of $240 billion. When the market cap approaches or falls below the realized cap, it often indicates a late-stage bear market, suggesting a potential uptrend in Ethereum’s price.
Additionally, Ethereum’s Market Value to Realized Value (MVRV) ratio is showing signs of increased profitability, aligning with a recovery in the bull market phase. The MVRV ratio has been climbing steadily since mid-2023, indicating that the average Ethereum investor is holding unrealized profits as it surpasses 1.0.
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