Ether (ETH) had a strong start to the year but experienced a decline in mid-March. However, in mid-May, it gained momentum due to the anticipation of the approval of spot Ether exchange-traded funds (ETFs) in the United States.
Although ETH has been trailing behind Bitcoin (BTC) since the beginning of the year, it has outperformed the flagship cryptocurrency since the official approval of spot Ether ETFs by the Securities and Exchange Commission on May 23.
Since May 15, ETH has surged approximately 30% compared to BTC’s 9% gain in their respective U.S. dollar pairs.
There are three main reasons for ETH’s outperformance over BTC in recent days. These include an increase in network activity and heightened excitement surrounding the launch of spot Ether ETFs.
Ether has been trending higher against BTC in the last 10 days, outperforming other top layer-1 tokens. BTC’s price has only climbed 2% over the last 30 days, while tokens such as BNB and SOL have rallied 3.35% and 1% respectively.
The ETH/BTC ratio started ascending on May 17, reaching a two-week high on May 23, representing a 31% increase.
From a technical perspective, the ETH/BTC weekly chart showed a bullish divergence from the relative strength index, indicating a “trend reversal had started.” This ratio is considered bullish as long as it remains above 0.051.
A pseudonymous analyst, Plazma, declared that “ETH is absurdly undervalued” and predicted that the ETH/BTC ratio will reach 0.1 within a few months.
Increasing on-chain activity is also supporting Ether’s outperformance. Data from DappRadar shows a 7.75% increase in transaction volume among top Ethereum decentralized applications (DApps) in the past week.
Furthermore, the number of unique smart contracts on Ethereum has also risen, indicating growing activity on the network.
The potential launch of spot Ether ETFs is adding to ETH’s bullish momentum and its strength against Bitcoin. Bloomberg senior ETF analyst Eric Balchunas believes that these investment products have a “legit possibility” of launching by late June after BlackRock updated a key filing necessary for launch.
Market participants are optimistic that spot Ether ETFs will push ETH to new highs, with some speculating that Wall Street will use it as a bet on Web3’s growth. There are even predictions that ETH’s price could reach $10,000 this cycle as institutional capital is rotated into Ether ETFs.
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