After a sustained downtrend relative to Bitcoin, Ethereum (ETH) is showing signs of recovery, with its price gaining over 4% in the last 24 hours, while Bitcoin (BTC) dipped 1.5%, falling below $95,000. This shift in market dynamics is attributed to traders rotating profits, as Bitcoin’s rally stalled, allowing Ethereum to stand out for a moment.
Ethereum’s outperformance occurred as capital moved into smaller, more volatile cryptocurrencies over the weekend, following a pause in Bitcoin’s meteoric rise after Donald Trump’s election victory. The ETH/BTC ratio, which tracks Ether’s performance relative to Bitcoin, hit a low of 0.0318 on Thursday, its weakest since March 2021. However, it has rebounded by 15%, reaching 0.0366 at press time.
Market expectations now suggest Bitcoin may trade sideways until December, while Ethereum could continue its short-term momentum. A note from digital asset hedge fund QCP indicated that Ethereum’s options market is skewed towards calls, implying optimism for Ether’s near-term performance, whereas Bitcoin calls are mostly bid for the latter half of 2024.
Rotation from Bitcoin to Ethereum is evident, especially among crypto hedge funds and family offices. Joshua Lim of Arbelos Markets noted this shift, and U.S.-listed spot ETH exchange-traded funds (ETFs) saw their first net inflows in days. Notably, BlackRock’s ETHA product received $99 million in inflows on Friday, after six days of outflows.
Crypto trader Pentoshi pointed out that Ethereum’s price action last week suggested a potential trend reversal, with the ETH/BTC ratio hitting a key support level and rebounding. This could signal further gains for Ether in the short term.
Meanwhile, Bitcoin has reached a psychological barrier around the $100,000 mark, with a significant sell wall preventing further price increases. According to Paul Howard from Wincent, Bitcoin is likely to consolidate at these levels as investors digest the rally. “Market neutral positions and downside protection are sensible risk-reward strategies here,” Howard advised.
In summary, while Bitcoin’s growth has stalled at $100K, Ethereum is showing strong signs of a rebound, potentially taking the lead in the coming weeks as market dynamics shift.
