The Rise of Ethereum Dominance and Potential Price Impacts

The Rise of Ethereum Dominance and Potential Price Impacts

Despite the recent influx of capital into spot Bitcoin ETFs, the expected positive impact on Bitcoin’s price has yet to materialize. In fact, Bitcoin experienced a decline of more than 5% following the approvals last week. Surprisingly, Ethereum managed to record an almost 8% increase over the same period, even though it struggled to maintain the $2,600 level. This data suggests that the market dominance of the largest altcoin, Ethereum, continues to surge against Bitcoin.

According to Santiment, an on-chain analytic firm, Ethereum’s market dominance over Bitcoin has seen a significant rise. Just in the past week, this figure witnessed a notable increase of more than 22.4%. Another indicator of Ethereum’s growing popularity is the average of 89.4k new Ethereum addresses generated daily during this period. Additionally, on January 16th alone, 96.3k wallets were created. Overall, these statistics emphasize the increasing appeal and adoption of the Ethereum network.

One of the key catalysts driving the appeal for Ethereum is the planned network upgrades, starting with the Dencun hard fork. These events have instilled a bullish perspective among investors and may present an opportunity for Ethereum to further decouple from the rest of the crypto market. This decoupling could potentially lead to price movements independent of Bitcoin’s influence.

Analysis conducted by QCP Capital reveals a deeper plunge in Bitcoin forwards compared to Ether forwards. The 1-month forward rate for Bitcoin dropped from a peak of 32% annually to a minimum of 9%, indicating a decrease of 23%. Similarly, the 1-month forward rate for Ether decreased from a high of 28% to 12%, marking a reduction of 16%. Despite these decreases, QCP Capital suggests that Ether forwards still appear attractive, with yields ranging from 11% to 13% annually. Furthermore, selling ETH 1m 2200 Puts is considered a decent play, offering yields above 21% annually and providing a buying opportunity in case of a dip.

Looking ahead, there are several significant events that may impact the crypto market. The Bitcoin halving, scheduled for mid-April, could have considerable effects on Bitcoin’s price dynamics. Moreover, the potential approval of spot Ethereum ETFs, starting in May, could bring additional attention and liquidity to the Ethereum market.

Aside from these specific events, broader macroeconomic factors can also influence the direction of the market in the interim. It is important to keep an eye on global economic developments, as they may have indirect consequences on the crypto space.

One notable trend is the consistent decline in the supply of Ether on crypto exchanges. Over the last ten days, the supply has dropped from 8.18% to 8.10%, nearing an all-time low of 8.05%. This suggests that Ether holders are increasingly moving their assets from exchanges to long-term storage in anticipation of a potential price rise. The reduced supply on exchanges could create a scarcity effect, contributing to upward price pressure.

Ethereum’s dominance over Bitcoin is experiencing a significant rise, with positive market sentiment and upcoming network upgrades as key drivers. Price expectations remain optimistic, and market participants are closely monitoring the potential impacts of significant events such as the Bitcoin halving and potential approval of Ethereum ETFs. Additionally, the decreasing supply of Ether on exchanges indicates growing confidence and anticipation of a price rise. As always, it is crucial to remain vigilant and assess both micro and macroeconomic factors that may shape the crypto market’s future.


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