Ethereum Outperforms Bitcoin Despite Market Downturn, Sparks Spot ETF Speculation
Summary:
Despite a slight drop-off after the Bitcoin ETF approval, Ethereum maintains an impressive performance, outshining Bitcoin in multiple areas, as stated in a report by analytics firm Glassnode. Ethereum's market cap dominance has grown by 2.9%, and positive investor sentiment is reflected in the high volume of net profits. Recent shifts in the derivatives market suggest a potential change in cryptocurrency capital flows, sparking speculation about a potential spot Ethereum ETF.
In the lead up to the Bitcoin ETF approval, Ether (ETH) prices surged 77%, reaching a 2022 high of $2,715. However, in the time since Bitcoin's approval, the value of ETH has softened alongside the broader crypto market. Despite this dip, on-chain analytics company, Glassnode, reveals that Ether has outshone Bitcoin in several respects.
Placed under the spotlight in Glassnode’s latest ‘The Week Onchain’ report, ETH has been shown to outstrip Bitcoin on quarterly, monthly, and weekly bases. Alice Kohn, analyst, highlighted a significant rise of more than 20% in Ether’s value compared to Bitcoin, aligning with overlapping activity in the latter's derivatives market.
According to data from Glassnode, this performance aligns with a comeback in ETH’s market dominance. Based on the chart below, it can be seen that ETH’s market cap dominance has grown 2.9% against Bitcoin since the BTC ETF approval.
Despite ETH trading 14% lower in the past week, positive market sentiments around the token persist. This is shown by the high volume of net profits recorded by ETH investors, reaching a new multi-year high which denotes significant shifts in investor profitability.
The NUPL (Net Unrealized Profit/Loss) metric, which measures the potential profit or loss based on investors' purchase prices, moved above 0.25 for the first time since November 2021, indicating escalating optimism. This could herald one of two things according to Kohn: either a growing positive sentiment for ETH, or a juncture where “markets pause to absorb profit-taking distribution pressure.”
Trader Ken evidenced this optimism stating that the “ETH/BTC confluence was nearing a breakout” with Ether’s price above $2,240.
ETH’s recent rally and its growing dominance in the derivatives market suggests a potential shift in crypto market capital flows. While Bitcoin’s perpetual swaps accounted for 55% of open interest in January 2022, which increased to 66.2%, “ETH open interest dominance fell from 45% to 33.8% between 2022 and 2024,” says Glassnode.
However, ETH regained some ground with its dominance growing to around 40% after the ETF approval. The rise in Ether’s market performance ignited speculation about a possible spot Ethereum ETF.
Lucas Kiely, chief investment officer for Yield App, states that given the clarity from Bitcoin ETFs and the seven deadlines set between May and August, Ethereum ETFs might arrive sooner than projected.
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Published At
1/25/2024 1:00:20 AM
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