Ether (ETH) started gaining value at the beginning of the year but its growth slowed down around mid-March. In comparison to Bitcoin (BTC), Ether has increased by approximately 48%, while Bitcoin has risen by around 57% in their USD pairs since the beginning of the year.
In recent times, Ethereum (ETH) has lagged behind Bitcoin (BTC) for several reasons. Firstly, there’s been less action on the Ethereum network. Secondly, there’s growing uncertainty about the approval of Ethereum-backed spot ETFs, which was initially scheduled for May.
ETH trended lower against BTC in the last 30 days
Over the past month, Ether has experienced a 13.5% decrease in value, falling short of Bitcoin’s 4% decline and outperforming only other leading layer 1 tokens like BNB from BNB Chain, which gained 15.5%, and Solana’s SOL, which surged by 16%.
The ETH/BTC ratio began declining on March 8, reaching its year-to-date low of $0.047 on April 7.
Over the past month, Ether has lagged behind Bitcoin for several reasons. Firstly, Bitcoin reached new record-breaking prices and saw over ten billion dollars invested in its spot Exchange Traded Fund (ETF). Additionally, trading volume for Bitcoin Ordinals approached three billion dollars. Another significant factor is the upcoming Bitcoin supply halving, which historically triggers a bullish trend in the cryptocurrency market.
Decreasing on-chain activity underpins Ether’s underperformance
Exploring Ethereum’s network activity, particularly its scaling solutions, can provide explanations as to why Ether lags behind Bitcoin. The significance of decentralized applications (DApps) on this blockchain is undeniable; however, decreasing usage in terms of users and volumes points towards reduced demand for ETH.
According to data gathered from DappRadar, the leading Ethereum decentralized apps (DApps) have experienced an average decline of approximately 6.42% in the number of active user addresses during the past month.
In the last month, there was a 26.51% decrease in transaction activity on Ethereum-based decentralized apps (DApps), primarily due to reduced usage on Uniswap, MetaMask Swap, Blur, and OpenSea.
Based on recent data from Coinglass, Ethereum’s network activity has decreased noticeably in various aspects over the past month. The number of daily active addresses on Ethereum has dipped significantly, falling from 622,963 on March 20 to 499,448 on April 10.
While Ethereum continues to lead the Decentralized Finance (DeFi) sector, Solana has seen significant growth in this area lately. This growth can be attributed to the surge in memecoin popularity and the high volume of stablecoin transactions on its network.
Spot Ether ETF may not come in May
An Ethereum exchange-traded fund (ETF) not getting approved by May is another factor contributing to the weakened performance and inferiority against Bitcoin for Ethereum, amplifying its downward trend.
Jan van Eck, the CEO of VanEck, has joined the chorus of critics expressing doubts about the SEC’s decision to approve a spot Ethereum ETF in May.
In an interview with CNBC on April 9, VanEck expressed his belief that the Securities and Exchange Commission (SEC) is likely to turn down the Ethereum ETF application from his investment firm. VanEck and ARK Invest, led by Cathie Wood, were among the early applicants for an Ethereum ETF in the US. The SEC’s rulings on their applications are set for May 23 and May 24.
Van Eck described how the SEC goes about regulating ETF proposals, mentioning that they usually offer feedback on applications and maintain communication with the applicants. In contrast, regarding Ethereum, there has been a significant absence of comments from the SEC.
“The way the legal process goes is that regulators will give you comments on your application and that happened for weeks and weeks before the Bitcoin ETFs, but now pins are dropping as far as Ethereum is concerned.”
Eric Blachunas, an analyst at Bloomberg who previously estimated a 70% likelihood of Ethereum ETF approval by May, has now lowered his prediction to 35%. He expresses concern over the silence from the Securities and Exchange Commission (SEC) towards ETF issuers, which he considers a potential warning sign for those anticipating Ethereum ETF approvals in the near future.
Analyst James Seyffart, along with me, has raised queries about the SEC’s inactivity and the absence of clear communication regarding the expected applications.
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2024-04-11 22:27