Key Points
- Ethereum (ETH) has outperformed Bitcoin (BTC) since the approval of spot Ethereum ETFs by the SEC.
- The increase in Ethereum's network activity and the anticipation of spot Ethereum ETFs are contributing to ETH's performance.
Ethereum (ETH) kicked off the year on a high note, but experienced a dip in mid-March.
However, the altcoin regained momentum in mid-May, sparked by the potential approval of spot Ethereum ETFs in the United States.
Despite trailing Bitcoin (BTC) since the start of the year, Ethereum has surpassed the leading cryptocurrency since the Securities and Exchange Commission (SEC) greenlighted spot Ether ETFs on May 23.
From May 15, ETH has seen an approximately 30% surge compared to BTC’s 9% gain in their respective USD pairs.
Why ETH is Outperforming BTC
There are three key factors contributing to ETH's superior performance over BTC in recent days.
These include a rise in network activity, and heightened enthusiasm surrounding the launch of spot Ethereum ETFs.
In the last 10 days, Ether has risen 23%, outshining Bitcoin and other top layer-1 tokens.
Bitcoin's price has only increased 2% over the last 30 days, while other top-cap layer-1 tokens, like BNB Chain’s BNB and Solana’s SOL, have seen increases of 3.35% and 1%, respectively, over the same period.
The ETH/BTC ratio started climbing on May 17, hitting a two-week high of $0.05854 on May 23, a 31% increase.
From a technical perspective, the ETH/BTC weekly chart showed a bullish divergence from the relative strength index, suggesting a “trend reversal had started,” as noted by trader and MN Trading founder Michaël van de Poppe.
This ratio is deemed bullish as long as the ratio remains above 0.051.
Analyst Plazma noted in a May 31 post that the ETH/BTC ratio will hit 0.1 within a few months and “10 ETH will be equal to 1 BTC.”
Ethereum’s network activity and scaling solutions are underpinning its superior performance.
Data from DappRadar shows a 7.75% increase in transaction volume among top Ethereum DApps over the past week, driven by decreases in Uniswap, Eigenlayer, MetaMask and Banana Gun.
The number of unique smart contracts on Ethereum also climbed from 37,870 on May 20 to 38,066 on May 31, according to CryptoQuant.
Additional data from CryptoQuant reveals a rise in Ethereum’s network activity over the last seven days.
The number of unique smart contracts on the Ethereum network increased from 37,870 on May 20 to 38,066 on May 31.
Besides strengthening on-chain metrics, the likely debut of Ethereum ETFs on the market soon is adding to ETH’s bullish momentum and increasing strength against Bitcoin.
Bloomberg Senior ETF analyst Eric Balchunas believes these investment products have a “legit possibility” of launching by late June after BlackRock updated a key filing necessary for launch.
BlackRock updated its Form S-1 for its iShares Ethereum Trust (ETHA) with the SEC nearly a week after the regulator approved its 19b-4 filing.
Balachunas said that another round of filings to “fine tune” SEC comments is likely, but an “end of June launch [is] a legit possibility.”
However, he kept his approval odds for around July 4, adding that an earlier approval would be a “long shot.”
Bloomberg ETF analyst James Seyffart said BlackRock’s updated S-1 is “almost certainly the engagement we were looking for.”
“Issuers and SEC are working toward spot Ethereum ETF launches.”
Market participants are optimistic that spot Ethereum ETFs will see ETH reach new highs as some speculate Wall Street will use it as a bet on Web3’s growth.
Others speculate the ETH price could hit $10,000 this cycle as institutional capital is rotated into Ether ETFs.
