After the SEC greenlit Ethereum ETFs on March 23, Ether hasn’t shown much growth yet. It’s a bit like how Bitcoin took about a month after ETF approval to start a big price surge, hitting a record high of $73,738.00 on March 14. Back in September 2022, Ethereum made some important upgrades, moving to what’s called proof of stake (PoS). This upgrade made Ethereum safer and greener by using staking instead of power-hungry mining, with validators securing the network instead of miners.
The rise of Ethereum’s apps (dApps) is getting traders interested in diversifying their investments. Let’s dig into how Ethereum and Bitcoin’s prices relate and what this means for Ethereum’s future growth.
BTC/ETH Price Relationship Explained
The BTC/ETH relationship is about how much one Bitcoin (BTC) can buy in Ethereum (ETH). Imagine Bitcoin is $60,000 and Ethereum is $3,000; this means you’d need 0.05 BTC to buy one ETH. If ETH’s price jumps faster than BTC’s, the ratio goes up, showing that you’d need more BTC to get ETH.
The correlation coefficient helps measure how closely Bitcoin and Ethereum move together. A coefficient of 1 means they move in sync, -1 means they move oppositely, and 0 means no clear pattern. For example, if BTC rises and ETH falls (negative correlation), or both rise together (positive correlation).
Historical Trends and What They Suggest
Looking back, Ethereum tends to do well in bull markets (when prices are rising). For instance, during the bull markets of 2018 and 2021, ETH’s price was above 0.05 BTC. After 2021, this 0.05 BTC level has been a strong support point, while 0.08 BTC has been a tough resistance level. During Bitcoin’s big rise, the correlation between BTC and ETH peaked on March 14, coinciding with Bitcoin’s all-time high.
Recent Trends and ETF Impact
Recent data shows a decline in the correlation between Bitcoin and Ethereum, especially after Ethereum’s hard fork in April 2023. This fork allowed staking withdrawals and reduced the correlation from 0.95 to 0.82. Factors like Ethereum’s growing use in dApps, NFT popularity, and the shift to PoS are driving this divergence.
Expectations around Ethereum ETFs are also shaping market sentiment. Currently, most ETH positions are profitable, and there’s been a 30% price jump in the past week. Big players (whales) are also making moves, with significant trading volumes indicating growing confidence in Ethereum, especially with the ETF approval.
Conclusion
The approval of Ethereum ETFs is a big step for crypto acceptance, likely leading to more investor activity and confidence in Ethereum’s future. Understanding how Ethereum and Bitcoin’s prices relate can help traders navigate these markets and anticipate potential price movements.
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