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Ether-Bitcoin Ratio Slides to Lowest Since April 2021. Here’s Why

May 15, 2024
    The ether-bitcoin ratio slides to a three-year low, extending year-to-date losses to nearly 16%.Several factors, such as uncertainty about the launch of spot ETH ETF in the U.S. and the growth of Ethereum-killers like Solana, are responsible for ether’s underperformance.
As a long-term crypto investor with experience in following market trends and analyzing various cryptocurrencies, I find the recent slide of the ether-bitcoin ratio to three-year lows concerning. The extended year-to-date losses for ETH, reaching nearly 16%, have raised some red flags for me.As a crypto investor, I’ve noticed that the value of one ether (ETH) in terms of dollars has been decreasing relative to bitcoin (BTC). This trend has continued since the ominous “death cross” pattern emerged on the charts about a month ago, which is often seen as a bearish indicator for ETH.
As an analyst, I’ve noticed that the ETH/BTC exchange rate dipped to a low of 0.04563 on Binance just prior to the reporting period, marking a new bottom since April 2021 based on TradingView’s chart analysis. This year, we’ve seen a significant decrease of around 16% in this ratio, suggesting a clear preference or dominance for Bitcoin as the leading cryptocurrency by market value.

As a researcher studying the market trends of Exchange-Traded Products (ETPs) linked to ether, I’ve observed a notable decrease in demand, resulting in the prices reaching their lowest point in nearly three years.

As an analyst, I’ve reviewed recent data from Bloomberg, as reported by ETC Group in their weekly update. The figures indicate that global ether Exchange-Traded Products (ETPs) experienced net outflows of approximately $63.5 million last week. Among these, Hong Kong-listed ETFs suffered the most significant losses. In contrast, bitcoin ETPs attracted inflows totaling around $92.5 million during the same period.

Multiple elements may be contributing to Ethereum’s loss of appeal among investors. These include the presence of rival layer 1 networks and ongoing doubt regarding the launch of spot Ethereum approvals in the United States.

As a researcher studying the cryptocurrency market, I’ve observed that the approval of spot bitcoin ETFs in the United States has strengthened bitcoin’s role as a store-of-value asset and a macro investment option. However, Ethereum’s fundamental position within the crypto sector is still debated due to emerging competitors like Solana. These competing layer-1 networks pose a challenge to Ethereum’s status as the preferred platform for decentralized application (dApp) development.

Ether-Bitcoin Ratio Slides to Lowest Since April 2021. Here's Why

As a researcher studying the decentralized exchange (DEX) market, I have observed an impressive surge in Solana’s dominance over the past year. Initially holding a mere 2% share of the total DEX volumes, it has since expanded tenfold to command a significant 21%. This growth comes at the expense of Ethereum‘s market presence.

As a researcher, I’ve discovered that the U.S. Securities and Exchange Commission (SEC) approved close to a dozen Bitcoin spot Exchange-Traded Funds (ETFs) back in January. Since then, these funds have attracted approximately $12 billion in net investments, based on data from Farside Investors.

The approval of ETFs (Exchange Traded Funds) linked to Ethereum’s spot market could bring a significant inflow of capital for ether, although it remains uncertain when the Securities and Exchange Commission (SEC) will give its green light.

On the decentralized betting platform Polymarket, traders estimate that there’s only a 10% likelihood the SEC will give its green light to a spot Ethereum ETF by May 31st. The regulatory body has until May 23rd to make a decision regarding VanEck’s application for launching such an ETF. BlackRock’s deadline, however, falls on June 23rd.

Finance attorney Scott Johnsson claims that the Securities and Exchange Commission (SEC) may reject Ethereum ETF proposals from companies like BlackRock due to their submission as commodity trust shares instead of meeting the requirements for securities.

Ilan Solot, the co-head of digital assets at Marex Solutions, expressed that ether often attracts unfavorable reactions from both crypto insiders and outside critics, and it possesses certain vulnerabilities.

“The capital is becoming more diversified. There are increasingly more options for investors to access the ecosystem through the various Layer 2 tokens (OP, ARB, etc.) and native protocol tokens in each project. This capital fragmentation is a trend I have observed.”
As a researcher, I’ve observed that Solana’s robust opposition towards Ethereum (ETH) and Bitcoin advocacy has fueled unfavorable narratives surrounding Ether. Given ETH’s high volatility in the cryptocurrency market, it presents an attractive opportunity for external players to publicly express bearish perspectives. Traditional exchanges like the Chicago Mercantile Exchange facilitate this trading activity.

To conclude, Ether has experienced rising inflation in recent times, marking a shift from the persistent deflationary trend that followed Ethereum’s switch to a proof-of-stake consensus mechanism in September 2022.

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2024-05-16 14:10