In a recent turn of events, Ethereum (ETH) has emerged from the shadows of Bitcoin (BTC), charting its own course in the dynamic cryptocurrency landscape. As Bitcoin took center stage with the anticipation surrounding its ETF approval, Ethereum experienced a notable decline in correlation with the leading cryptocurrency.
Data from Kaiko reveals a significant drop in the BTC to ETH correlation, falling below its historical average of 0.71 for the first time since 2021. This divergence is attributed to the recent market dynamics, where Bitcoin gained momentum fueled by ETF-related hype, while Ethereum underwent a comparatively subdued rally.
A closer look at the performance leading up to Bitcoin’s ETF approval offers intriguing insights into Ethereum’s potential trajectory. Over the past year, Bitcoin boasted a robust 100% increase in returns, outpacing Ethereum’s more modest 60% returns. However, a pivotal shift occurred on the day of Bitcoin’s approval, as BTC experienced a decline, while Ethereum rallied. This rally was propelled by growing anticipation that Ethereum could be the next in line for a similar approval.
Notably, Ethereum’s spot volume on Centralized Exchanges (CEXs) surged to its highest level since the FTX collapse in the past week. This surge, characterized by a significant disparity in volume between Ethereum and altcoins, suggests heightened market activity and a potential shift in the cryptocurrency landscape.
Amidst the changing market dynamics, Ethereum enthusiasts find hope in recent developments on the Ethereum network. The deployment of the Dencun upgrade on the Goerli testnet signifies progress in the development team’s efforts. Discussions during the recent ACD call also hinted at deploying the Dencun upgrade on other testnets, showcasing ongoing advancements within the Ethereum ecosystem.
The prospect of an Ethereum ETF approval adds another layer of optimism for ETH holders. While Bitcoin’s ETF approval played a role in market dynamics, Ethereum’s turn may be on the horizon, with potential implications for its value and adoption.
In a parallel narrative, Ethereum Classic (ETC) experienced a brief surge in value following the ETF approval for Ethereum-linked tokens on January 10th. However, the excitement surrounding the ETF has waned, leading to a notable price retracement for ETC.
As of the latest data, ETC is trading at $23.90, reflecting a 19% drop in the last week. Despite the dip, bullish momentum persists, as indicated by the coin’s momentum indicators and Chaikin Money Flow (CMF) above the zero line. The positive readings from ETC’s Directional Movement Index (DMI) further confirm the strength of the bullish trend.
However, the recent price decline in the last week has resulted in a 22% plunge in ETC’s futures open interest since January 12th. At present, the coin’s futures open interest stands at $162.34.
The surge in ETC price post-ETF approval triggered heightened market volatility, with the Bollinger Bands (BB) indicator showing a widening gap between the upper and lower bands. This volatility indicates that ETC remains susceptible to price swings in the near future.
As Ethereum and Ethereum Classic navigate their respective paths, market participants are closely watching the unfolding dynamics. The weakened correlation between Ethereum and Bitcoin, coupled with Ethereum’s recent network developments, paints an intriguing picture for the future of these leading cryptocurrencies.
In conclusion, Ethereum’s decoupling from Bitcoin amid changing market dynamics, coupled with ongoing developments and the potential for an ETF approval, sets the stage for a distinctive journey for both Ethereum and Ethereum Classic in the evolving cryptocurrency landscape.
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