Ethereum (ETH) has shown signs of resurgence after a challenging year marked by underperformance against Bitcoin (BTC) and various altcoins, according to a recent report by Kaiko. The ETH to BTC ratio, reflecting the performance comparison of the two cryptocurrencies, had been downward after “The Merge,” despite a successful upgrade in April. However, a game-changing move by BlackRock filing for a spot in Ethereum ETF has shifted sentiments.
BlackRock’s ETF Filing Sparks Ethereum Surge
Following BlackRock’s filing, Ethereum witnessed a surge, surpassing the $2,000 mark for the first time since April. Daily spot trade volumes also hit a notable $7 billion, marking their highest point since the FTX collapse. This development has added momentum to the ongoing crypto rally, fueled by improved global risk sentiment, falling U.S. Treasury yields, and a rise in altcoin + ETH volume relative to BTC.
The surge in demand for leverage is evident as ETH open interest has recovered to early August levels. In a contrasting scenario, BTC’s open interest has declined due to a wave of liquidations on Binance. This shift led to the Chicago Mercantile Exchange (CME) surpassing Binance as the largest BTC futures market.
Ethereum funding rates, indicating sentiment and bullish demand, have surged to their highest levels in over a year. November has also seen a spike in volatility for both BTC and ETH, reaching 40% and 50%, respectively, after hitting multi-year lows of around 15% during the summer months. Higher volatility and increased trade volumes are expected to return liquidity providers to the market, potentially closing the lingering “Alameda gap” in order book depth.
The Securities and Exchange Commission’s (SEC) previous rejections of spot Bitcoin ETF applications have cited concerns about surveillance sharing and the potential for manipulation. However, the report questions whether new surveillance-sharing agreements with Coinbase are sufficient to address these concerns.
Altcoin Momentum & Market Dynamics Unveiled
Solana (SOL) has experienced an unexpected surge in the altcoin space, reaching $60 for the first time since May 2022. Despite concerns related to FTX’s bankruptcy estate reportedly unstaking and transferring millions of SOL tokens to centralized exchanges, SOL prices have continued to rally, outperforming BTC significantly.
FTX’s native token, FTT, witnessed a remarkable surge of over 180% after SEC Chairman Gary Gensler’s comments raised hopes for FTX 2.0 approval. Despite lacking a clear use case and an uncertain future, FTT continues to be actively traded on multiple platforms.
When analyzing liquidity, Kraken emerges as a notable player, with a slightly greater 1% market depth than Coinbase since April, despite having three times less trade volume. Kraken dominates the stablecoin-to-fiat market, accounting for nearly 37% of its trade volume.
As the crypto market gains momentum, BTC-linked investment vehicles are witnessing increased inflows. The report notes a divergence between the performance of BTC-linked investment vehicles and stocks since BlackRock’s BTC spot ETF filing in mid-June, suggesting investors are anticipating the potential impact of a spot ETF on the market.
MicroStrategy, the largest corporate holder of BTC, has surprisingly outperformed Coinbase in recent weeks. While the approval of a spot ETF could pose challenges for MicroStrategy’s share prices, analysts predict benefits from BTC’s upcoming halving and changes in accounting rules for digital assets.
The crypto market is experiencing a dynamic shift with Ethereum’s resurgence, Solana’s unexpected rally, and ongoing developments in the regulatory landscape. As the market continues to evolve, investors are closely watching the impact of spot ETFs and the performance of key players in the crypto space.