As bitcoin moves towards its all-time high (ATH) of nearly $70,000, analysts are closely watching ethereum, the world's second-largest cryptocurrency, and wondering how quickly it will follow suit and break its record ATH of about $5,000. printed at the end of 2021.
How will ethereum react when bitcoin surpasses $70,000?
An analyst, publishing on platform reflexes the difference in the two coins' positions compared to the last time bitcoin surpassed the 2017 highs of $20,000 in December 2020. Then, ethereum was trading at $600, 57% below its previous ATH of about $1,400.
As bitcoin approaches its record peak of around $70,000 recorded in December 2021, ethereum is approaching $4,000. However, the difference between then and now is that eth is about 36% below its ATH of around $5,000.
The question on the analyst's mind is, considering historical performance, how quickly eth will surpass $5,000. When bitcoin surpassed $20,000 in late December 2020, the analyst notes that it took about two months for eth to surpass $1,400 and record new highs.
The boom after this breakout lifted eth to around $5,000, primarily accelerated by retail activities revolving around decentralized finance (DeFi) and non-fungible token (nft) minting.
Looking at the ethereum price action on the daily chart, it is clear that the buyers are in control. eth prices, data from CoinMarketCap ethereum/” target=”_blank” rel=”nofollow”>reveals, have increased approximately 7% in the last 24 hours and 15% in the previous week. However, it remains to be seen how quickly eth could repeat the previous feat of 2020-2021.
Exploring the possibilities of eth
As in the past, ethereum price action benefits from bitcoin expansion. The revival of bitcoin prices has sparked a flow of capital into ethereum, preparing its broader ecosystem comprising DeFi and nft protocols. DeFiLlama Data ethereum” target=”_blank” rel=”nofollow”>sample that ethereum manages more than $56 billion in assets.
Notably, almost all major DeFi protocols on ethereum, including Lido, Maker, Uniswap, and EigenLayer, have seen strong inflows over the past day, week, and month.
Aside from market-related factors, ethereum prices are also stabilizing on hopes surrounding the eventual approval of a spot ethereum exchange-traded fund (ETF). BlackRock is among the major asset managers that file reports with the U.S. Securities and Exchange Commission (SEC).
However, the agency postponed a decision on BlackRock's application for an ethereum spot ETF, citing concerns about the network's new proof-of-stake consensus mechanism. The SEC expressed concern that staking, a central aspect of proof-of-stake, could create opportunities for manipulation.
The clear reservation regarding proof-of-stake casts a shadow over ethereum's near-term prospects despite the current price rally. Still, the community finds relief in knowing that the Commission refused to approve a spot bitcoin ETF for approximately ten years before January 2024.
Featured image of DALLE, TradingView chart
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