NEWSLETTER
Amid a volatile crypto market, ethereum (eth) is gaining momentum, outperforming its long-time rival bitcoin (btc). According to Kaiko dataThe eth/btc ratio has been rising steadily, recovering from multi-year lows.
eth/btc Ratio Rises, eth Momentum Increases
The eth/btc ratio technically measures market sentiment towards these two leading cryptocurrencies. The recent rally indicates that investors are increasingly optimistic about ethereum's potential relative to bitcoin.
This upward trajectory is driven by growing optimism around the possible approval of ethereum spot ETFs and general confidence that markets will trend bullish in 2024. The prospect of this product entering the market has also injected new energy into the eth ecosystem, elevating it to the second most valuable coin by market cap.
Related Reading: Institutional Inflows into XRP Jump 244% Amid ETF Speculation
After prolonged lows, the eth/btc ratio began to rise immediately after the United States Securities and Exchange Commission (SEC) approved 11 bitcoin spot ETFs last week. This unexpected change, analysts note, is mainly due to growing confidence that the SEC will approve a similar product for eth.
ethereum spot ETFs, which would provide direct exposure to the ethereum market, would make it easier for institutional investors to benefit from eth volatility. So far, the SEC has approved an ethereum futures ETF that, unlike the spot ETF, tracks an index, not the direct price of this asset.
Blackrock is among the major Wall Street giants interested in issuing an ethereum spot ETF. Given its track record of success, the decision by one of the world's leading asset managers to apply for this product is an endorsement of its prospects. Previously, Larry Fink, CEO of BlackRock, said that ethereum, despite its scale challenge, could lead the tokenization drive in the coming years.
US SEC Still to Clarify Whether ethereum is a Commodity or Security
Still, the SEC has yet to clarify whether eth, a pre-mined coin with some assets distributed to the ethereum Foundation, is a commodity like bitcoin. Previously, Gary Gensler, chairman of the SEC, was cornered by US policymakers to give the agency's stance on the currency, but he did not do so.
However, with the prospect of spotting ethereum ETFs and ethereum's dominance in decentralized finance (DeFi) and non-fungible tokens (nft), eth is likely to continue outperforming btc in the coming months. Price action data shows that eth is already up 20% against btc in the last trading week.
Featured image from Canva, TradingView chart
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