Ethereum’s Correlation to Bitcoin Declines as Prices Fall
Bitcoin [BTC] was in the limelight for quite some time due to anticipation around the ETF. Due to this, Ethereum [ETH] got left behind and the correlation between the two coins witnessed a decline.
According to Kaiko’s data, the BTC to ETH correlation has fallen below its historical average of 0.71 for the first time since 2021. In recent months, the two cryptocurrencies have demonstrated divergent price movements, with BTC benefiting from ETF-related hype and speculation, while ETH underwent a comparatively subdued rally.
Analyzing BTC’s performance leading up to its ETF approval offers insights into ETH’s potential trajectory. Over the past 365 days, BTC has witnessed a robust 100% increase in returns, outpacing ETH’s more modest 60% returns.
However, a shift occurred on the day of BTC’s approval, with BTC experiencing a decline and ETH rallying, fueled by the growing anticipation that ETH could be the next in line for such approval.
New Developments on Ethereum Network May Boost ETH in Future
Apart from the potential approval of the Ethereum ETF, the new developments on the Ethereum network may also provide some hope to ETH holders.
Recently, the Dencun upgrade was deployed on the Goerli testnet, further cementing the fact that the development teams progress in terms of development.
Moreover, in the recent ACD call, discussions around deploying the Dencun upgrade on other testnets also ensued.
BTC-ETH Correlation Hits Historic Low, What Does it Mean for ETF?
For the first time since 2021, the BTC:ETH correlation dropped below its all-time average of 0.71.
This decline in correlation between BTC and ETH could have implications for the potential approval of an Ethereum ETF. It suggests that investors and traders are considering Ethereum as a separate investment opportunity from Bitcoin, and its performance may be evaluated independently.
The decline in correlation could also indicate a shift in the market sentiment and demand for different cryptocurrencies. Investors may see Ethereum as having its own unique value proposition and potential for growth, which could drive increased interest in and demand for ETH.
ETH Volume Surges on Centralized Exchanges, Indicates Changing Landscape
In the past week, ETH spot volume on Centralized Exchanges (CEXs) surged to its highest level since the FTX collapse.
Notably, there was a substantial disparity in volume between ETH and altcoins, favoring ETH and representing the most significant gap since March 2023.
This surge in volume suggests heightened market activity and interest in ETH, potentially indicative of a changing dynamic within the cryptocurrency landscape.
Investors and traders may be shifting their focus towards Ethereum and its potential for growth, as evidenced by the increase in trading volume. The surge in volume could also be a response to the new developments and upgrades on the Ethereum network, which are generating excitement and anticipation among market participants.
Developments on Ethereum Network Provide Hope for ETH Holders
Apart from the potential approval of the Ethereum ETF, the new developments on the Ethereum network may provide some hope to ETH holders.
The deployment of the Dencun upgrade on the Goerli testnet is a significant milestone for the Ethereum development team, showcasing their progress in terms of development.
Further discussions around deploying the Dencun upgrade on other testnets indicate the team’s commitment to enhancing the functionality and scalability of the Ethereum network.
These developments not only showcase the ongoing progress of the Ethereum network but also provide ETH holders with hope for the future growth and adoption of the cryptocurrency.
In conclusion, Ethereum’s correlation to Bitcoin has declined as prices fell, indicating a shift in market sentiment and potential for ETH to be evaluated independently. The surge in ETH volume on centralized exchanges suggests increased interest and market activity, potentially driven by the new developments on the Ethereum network. ETH holders can find hope in these developments, as they showcase the ongoing progress of the Ethereum network and its potential for future growth.
Analyst comment
Positive news:
– New developments on the Ethereum network may boost ETH in the future.
– Recent discussions around deploying the Dencun upgrade on other testnets indicate progress and commitment by the Ethereum development team.
– Surge in ETH volume on centralized exchanges indicates heightened market activity and interest in ETH.
Neutral news:
– Ethereum’s correlation to Bitcoin has declined as prices fell, suggesting a shift in market sentiment and potential for ETH to be evaluated independently.
As an analyst, I believe the market will see increased interest and trading activity in ETH due to the new developments on the Ethereum network and the declining correlation with Bitcoin. This could drive the price of ETH higher in the near future.
