Due to speculation that spot Bitcoin ETFs may be approved in the United States, Bitcoin has rebounded for two consecutive weeks, while Ethereum's gains have been relatively moderate during the same period, and the price of Ethereum relative to Bitcoin (ETH/BTC trading pair) continues to decline.According to TradeView data, as of the time of publication, the ETH/BTC ratio was 0
Due to speculation that spot Bitcoin ETFs may be approved in the United States, Bitcoin has rebounded for two consecutive weeks, while Ethereum's gains have been relatively moderate during the same period, and the price of Ethereum relative to Bitcoin (ETH/BTC trading pair) continues to decline.
According to TradeView data, as of the time of publication, the ETH/BTC ratio was 0.05182, which is the lowest since mid-2021 and close to the low point of approximately 0.049 in June 2022. The last time this ratio fell below 0.049 was before May 2021.
Historical data shows that the high levels of ETH/BTC typically occur during Ethereum's excellent bull market, reaching 0.085 at one point. However, in a bear market, the situation has reversed, with Bitcoin typically taking the lead.
At the same time, Bitcoin's growth continued to beat most counterfeit currencies, driving its dominant position to soar. Bitcoin's share of the total cryptocurrency market value rose to 54.4%, the highest level since April 2021. A ratio of over 50% means that Bitcoin's market value exceeds the sum of all other cryptocurrencies.
The above data shows that the index has been fluctuating between 39% and 49% for the past two years, until it broke through this range in mid June. This breakthrough coincides with the news that BlackRock is applying for a spot BTCETF in the United States, when the price of Bitcoin rose to over $30000.
Why is Bitcoin leading the way in growth?
An analyst pointed out that due to spot ETFs and hedging narratives, Bitcoin's gains are far ahead.
Recently, with Grayscale winning in court and traditional financial giants such as BlackRock, Fidelity, and ArkInvest applying for Bitcoin spot ETFs, the community is enthusiastic. Industry insiders believe that the approval of ETFs by the US Securities and Exchange Commission (SEC) is almost certain, which may unleash a new wave of demand for Bitcoin.
Noelle Acheson, a crypto market analyst and author of CryptoIsMacroNow, stated in her daily communication that the rise of Bitcoin's dominant position can be explained by market cycles and its attractiveness as an asset with lower risk than counterfeit coins (including ETH).
Acheson pointed out that "Bitcoin often leads the cryptocurrency market in the early stages of a cycle, and only loses its dominant position when investors better adapt to the risk curve and smaller counterfeit currencies emerge
Ethereum lacks rising narrative
According to a report released by digital asset management company CoinShares on Monday, investment products based on Bitcoin and Solana have inflows of approximately $112 million and $43 million respectively so far this month, while Ethereum based funds have outflows of $4.7 million.
In fact, according to CoinShares' report, Ethereum has had the highest outflow of funds this year, totaling $119 million, followed by Tron.
James Butterfill, research director at CoinShares, attributed the difference in funding between BTC and Ethereum to people's "expectations for spot Bitcoin ETFs" and "ongoing concerns about Ethereum".
Noelle Acheson also pointed out that Bitcoin has ETFs and hedging narratives as a tailwind, while Ethereum faces unfavorable factors such as regulatory indifference and upgrade uncertainty. Although Ethereum has always been at the forefront of the Decentralized Finance (DeFi) movement and pioneered smart contracts, network congestion and high transaction costs have been persistent issues, especially with the emergence of emerging competitors in this field making it lackluster.
Bitfinex analysts stated in a report that the main bullish narrative in the market is BTCETF products, while Ethereum lacks a convincing long-term narrative.
Earlier this month, six ETFs based on Ethereum futures were launched in the United States. However, the sluggish opening trading did not generate the same level of excitement and trading volume as the first BTC futures ETFProsharesBITO launched in October 2021.
David Duong, research director at Coinbase, stated that the total first-day trading volume of top ETH futures ETFs is less than $1.5 million. In stark contrast, according to Bloomberg data, the trading volume of BITO on its establishment date exceeded $1 billion. In addition, the net inflow into these ETH futures ETFs is less than 2% of BITO.
Institutions may be more willing to invest in Bitcoin spot ETFs because they believe that Bitcoin spot risk is lower compared to Ethereum futures, "Benjamin Jarvis, co founder of analyst firm JLabs Digital, said in a Bloomberg interview
Normal capital rotation?
Data shows that BTC prices have increased by 32% in the past month, while ETH has only increased by 12%. Looking at the longer timeline, Bitcoin prices have doubled this year, while ETH has increased by about 50%.
John Glover, Chief Investment Officer of cryptocurrency lending firm Ledn, believes that historically, when Bitcoin prices rise, funds will begin to flow into counterfeit currency. This means that the launch of one or more spot Bitcoin ETFs is likely to trigger the next big bull market in the entire crypto ecosystem.
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