With ETH Skyrocketing by 20% in a Single Day, When Will the Altcoin Season Arrive Based on ETH/BTC?

[TLDR]

Last week, the ETH/BTC ratio hit a three-ear low of 0.043, and the market was filled with FUD sentiment of weak ETH innovation and weak prices.

The sustained weakness of ETH/BTC is mainl attributed to the approval of BTC's spot ETF, the rapid expansion of BTC and SOL ecosstems, the lack of innovation in the ETH ecosstem, and the current situation of cold trading.

Recentl, the Based Rollup, ePBS, Resetting, and various account abstractions of EIP in the ETH ecosstem have become innovative highlights in the brewing process, with Resetting being particularl anticipated.

Introduction

The ETH/BTC ratio reached a new low of 0.043, reaching a three-ear low. Amidst the market's FUD sentiment towards ETH, ETH surged 20% in a single da, setting a record for a three-ear increase.

With a rotation of ups and downs, turning to bulls and bears, this article will observe the timing of ETH and even the Altcoin season from the fluctuation of ETH/BTC exchange rates.

ETH/BTC hit a two-ear low, and the spillover effect of spot ETF funds is not significant

In the 2023 to 2024 ccle, we can observe a significant widening of the performance difference between BTC and ETH. Specificall, the price trend of ETH appears to be relativel weak, which can be seen as a reflection of the weak overall trend of capital rotation.

Especiall compared to past ccles and breakthroughs in ATH (the highest point in histor), ETH's performance can onl be described as passive or weak.

ETH/BTC, which has alwas been considered a benchmark for Altcoin trends, fell to 0.043 last week, reaching a new low since April 2021, with ETH market share dropping to 14.6%. This poor performance reflects that the pursuit of BTC b long-term and short-term participants has significantl exceeded their enthusiasm for ETH, especiall short-term investors showing a significant lag in interest in ETH. Source: Gate.io

A recent report b Glassnode exploring ETH being weaker than BTC also pointed out this situation. Bitcoin saw a significant increase in short-term speculative activit before reaching a historic high (ATH) on March 14 this ear. However, Ethereum (ETH) failed to break through its 2021 ATH, unlike US spot ETFs, where a large influx of new capital boosted BTC prices. Source: glassnode

To this da, ETH has et to perform better than BTC in the previous two bull markets, and man giant whales betting on ETH reversal have also suffered significant losses. According to on-chain analst @ai_9684xtpa monitoring, as the ETH/BTC exchange rate hit a new low in nearl three ears, the giant whale 0x111...dc42e, which has been continuousl bullish on the ETH/BTC exchange rate since March 2023, has accumulated liquidation of $22.45 million.

Overall, the ETH market follows a price trajector similar to BTC, but most indicators show that ETH performs poorl relative to BTC. Whether the positive progress of ETH spot ETFs on Ma 21 can strengthen it will be further observed and considered in the following text.

XX flip Ethereum - Anale the underling market structural changes

So far, BTC's overall performance has indeed outperformed ETH, mainl due to the approval of BTC's spot ETF and the rapid expansion of the BTC ecosstem. Of course, the strong performance of its public chain rival SOL has also impacted ETH.

Therefore, with the overall prosperit and structural changes of the crpto market, the role of ETH/BTC as an Altcoin indicator in the Altcoin sector's trend is weakening. The SOL public chain, AI sector, MEME sector, and others have shown a relativel resilient or leading trend in this bull market, forming a clear differentiation from the sustained weakness of ETH. Source: BLOCKCHAINCENTER.NET

Although ETH/BTC's position as an Altcoin signal is no longer strong, it is still worth exploring whether ETH will continue to weaken.

According to the weekl trend in Figure 1, ETH/BTC has been slowl declining in the downward channel since September 2022. Last week, it briefl fell below the ke support level of 0.05. From a dail perspective, the exchange rate has finall rebounded significantl under the support of the downward channel and the positive progress of spot ETFs. The important pressure level in the next stage is 0.06.

If we further magnif the observation ccle, as shown in the figure below, we can see that the ETH/BTC exchange rate showed a strong upward trend during the craiest periods of the two bull markets in the second half of 2017 and the first half of 2021. Source: Gate.io

If we follow this historical pattern, then the rise of ETH/BTC seems to have not started et, and it seems too earl to be overl bearish on ETH.

From a fundamental perspective, the most significant variable that ma affect the trend of ETH shortl is the progress of the US SEC's approval of its spot ETFs.

Although the impact of spot ETFs in the Hong Kong market is limited, it has pioneered the recognition of ETH b global judicial regulator regions. On the da of writing, due to the SEC's requirement for exchanges to accelerate regulator documents on Ethereum spot ETFs, Bloomberg analsts increased the probabilit of approval for spot Ethereum ETFs from 25% to 75%, significantl enhancing the prospect of approval for ETH spot ETFs. Source: CoinDesk

This news has stimulated ETH prices to soar b 18% in a short period, with prominent increases in ETH concept tokens such as Laer 2, Infra, and MEME, sweeping awa the recent gloom of continuous decline. During this period, large investors on the chain activel engaged in leveraged trading through lending platforms such as Aave and purchased a large amount of ETH. Of particular note, James Fickel, as a staunch supporter of the ETH/BTC exchange rate, has accumulated over $190 million in WBTC loans from Aave and converted them into ETH. In addition, other large investors have borrowed to purchase stETH and WBTC, further boosting market enthusiasm. These trading behaviors indicate that the market is optimistic about the future development of ETH and willing to make large investments.

To add, the 75% approval rate is onl applicable to 19b-4, and approval of the S-1 document is also required. The current prevailing market view is that the SEC ma approve 19b-4s this week and then slow down the execution speed of S-1s. Legall speaking, if Ethereum's ETF is to be successfull launched, the SEC must approve both 19b-4s (exchange rule changes) and S-1s (registration statements) simultaneousl.

Which innovations can make ETH rise again?

The activit of the Ethereum communit is not plagued b low prices but rather continues to generate man thought-provoking insights and creativit. In addition to the highl anticipated spot ETFs, recent discussions on technological innovation in Based Rollup, ePBS, Resting, and various account abstractions of EIP (Ethereum Improvement Proposal) have been particularl livel. These topics not onl reflect the foresight of Ethereum developers but also foreshadow the recover journe of ETH.

We have written several articles to explore the Resting track, which is also the narrative direction that ETH is most likel to generate a positive flwheel in this bull market. From Lido unlocking liquidit staking to Pendle splitting tokenied equit, as well as Eigenlaer and a group of LRT projects, this tpe of liquidit staking has developed into more complex and efficient, completel different from simple DeFi Lego blocks.

Ethereum staking is graduall developing towards diversification, and new paradigms are constantl being explored. For example, Laered staking allows investors to choose staking strategies at different risk levels based on their risk preferences; automated staking improves management efficienc through smart contracts; collective staking (or shared staking) provides opportunities for small investors to cooperate and increase value; and the combination of staking and RWA endows phsical assets with new liquidit. Source: Eigenlaer

Although there are currentl various staking models in the ETH ecosstem, this is onl the beginning. As more users and institutions participate in DeFi, diversified staking models will become a choice for more people, and stakers will maintain network securit and obtain returns b providing liquid collateral. This positive econom will help reduce the risk of network manipulation and promote the sustainable construction of the entire ecosstem, which is different from the past pure Poni staking returns.

Looking ahead, Ethereum is beginning to demonstrate its unique potential in areas such as Resting, and its current lower valuation provides a solid foundation for its future upward potential. As market sentiment graduall improves, we have noticed that the ETH/BTC exchange rate has shown a strong rebound trend after a brief decline, and some new concept Altcoin sectors are also repairing their value. We suggest investors remain patient and look forward to Ethereum leading the market to new heights with its solid technological foundation and growing communit support.