- Ethereum’s correlation to Bitcoin declined as prices fell.
- New developments on the Ethereum network may help ETH in the future.
Bitcoin [BTC] was in the limelight for quite some time due to anticipation around the ETF. Due to this, Ethereum [ETH] got left behind and the correlation between the two coins witnessed a decline.
Parting ways
According to Kaiko’s data, the BTC to ETH correlation has fallen below its historical average of 0.71 for the first time since 2021. In recent months, the two cryptocurrencies have demonstrated divergent price movements, with BTC benefiting from ETF-related hype and speculation, while ETH underwent a comparatively subdued rally.
For the first time since 2021, the BTC:ETH correlation dropped below its all time average of 0.71.
What does this mean for a possible spot #ETH ETF approval? pic.twitter.com/qJSqVVDkbJ
— Kaiko (@KaikoData) January 18, 2024
Analyzing BTC’s performance leading up to its ETF approval offers insights into ETH’s potential trajectory. Over the past 365 days, BTC has witnessed a robust 100% increase in returns, outpacing ETH’s more modest 60% returns.
However, a shift occurred on the day of BTC’s approval, with BTC experiencing a decline and ETH rallying, fueled by the growing anticipation that ETH could be the next in line for such approval.
In the past week, ETH spot volume on Centralized Exchanges (CEXs) surged to its highest level since the FTX collapse.
Notably, there was a substantial disparity in volume between ETH and altcoins, favoring ETH and representing the most significant gap since March 2023.
This surge in volume suggests heightened market activity and interest in ETH, potentially indicative of a changing dynamic within the cryptocurrency landscape.
Source: Kaiko
Developments on Ethereum
However, some factors may help generate interest in ETH in the next few months.
Apart from the potential approval of the Ethereum ETF, the new developments on the Ethereum network may also provide some hope to ETH holders.
Read Ethereum’s [ETH] Price Prediction 2024-25
Recently, the Dencun upgrade was deployed on the Goerli testnet, further cementing the fact that the development teams progress in terms of development.
Moreover, in the recent ACD call, discussions around deploying the Dencun upgrade on other testnets also ensued.
Quick update from ACD call today:
– Cancun/Deneb upgrade on Sepolia and Holesky testnets remain scheduled for activation on Jan 30 and Feb 7, respectively.
– Client releases for both upgrades will be bundled and shared in a blog post next Tues.
– Full writeup from today’s call…— Christine Kim (@christine_dkim) January 18, 2024