The ratio of Bitcoin to Ether has reached its highest level since July 2022, as Bitcoin continues to outperform the broader cryptocurrency market. According to Kaiko Research’s report, BTC is currently trading at nine-month highs, up 30% over the past seven days.
Investors are increasingly turning to Bitcoin in the spot markets and the perpetual futures market, as evidenced by a surge in open interest. The data shows $2.6 billion more in open positions in BTC than at the beginning of the week, indicating a significant influx of investment into derivative markets.
The rise in open interest was driven by price effects and the opening of new contracts, as indicated by the increase in BTC open interest by over 50k in just one week.
While ETH open interest only rose by $600 million, with an 18% increase compared to BTC’s 51% surge, suggesting that it struggled to gain as much momentum as BTC.
Bitcoin Rallies Amdist Market Uncertainty
The increase began after the USDC turmoil subsided and has continued despite ongoing stress in the banking sector and uncertainty around the Fed meeting.
However, despite surging volumes, liquidity remains thin, with a 2% market depth for BTC-USD and BTC-USDT pairs hitting 10-month lows after Silvergate’s collapse, per the report.
Depth dropped even lower than levels seen in the immediate aftermath of FTX, likely due to the closure of major on-ramps for crypto markets, which included Silvergate’s SEN payment network.
Meanwhile, the relevance of fiat versus stablecoin usage on centralized exchanges is on the rise. Presently, stablecoins dominate 78% of all trades on such exchanges, while only 19% are in fiat currencies. The remaining trade volume is divided between Bitcoin, Ethereum, and exchange tokens such as BNB.
Additionally, as fiat on-ramps become scarcer, the market share of stablecoins is expected to grow, particularly on offshore platforms like Binance, which are already being disconnected from fiat payment rails. USDT accounts for 80% of all stablecoin-denominated trades.
However, with every regulatory crackdown comes opportunity, particularly for regions abroad. The big question is whether Europe or APAC can replace some of the fiat payment rails that have been dismantled in the US.
Moreover, the report revealed that in 2023, weekend liquidity management has also become a challenge for crypto markets, which operate 24x7x365 and struggle to match their needs with traditional financial institutions.
On average, there was a 33% reduction in weekend trading volumes compared to weekdays, but this difference varied greatly among different exchanges. Nevertheless, the closure of two major crypto-friendly banks in the US is expected to worsen market fragmentation between these exchanges.
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