Understanding the Recent Surge of Ether in the Crypto Market

Ether, also known as ETH, started the year with strength but later tapered off in mid-March. However, the altcoin gained momentum again in mid-May fueled by the anticipation of spot Ethereum ETFs approval in the US.

Despite lagging behind Bitcoin (BTC) since the start of the year, Ether has been outperforming the dominant cryptocurrency since spot Ether ETFs received SEC's approval on May 23. From May 15 onwards, ETH surged by about 30% compared to BTC's 9% gain in their respective USD pairs.

There are three key reasons for ETH surpassing BTC recently, including an increase in network activity and the excitement surrounding the imminent launch of spot Ethereum ETFs.

ETH's Recent Performance Against BTC

Over the past 10 days, Ether has risen by 23%, outperforming Bitcoin and other top layer-1 tokens. In contrast, BTC only saw a price increase of 2% in the last 30 days, while other major layer-1 tokens like BNB Chain's BNB and Solana's SOL rose by 3.35% and 1% respectively during the same period.

The ETH/BTC ratio started trending upwards on May 17, hitting a two-week high of $0.05854 on May 23, marking a 31% uptick.

Analyzing the ETH/BTC weekly chart from a technical viewpoint, a bullish divergence was observed from the relative strength index, indicating the initiation of a trend reversal, as pointed out by trader Michaël van de Poppe. As long as this ratio remains above 0.051, it is considered a bullish signal.

In a statement on X on May 31, pseudonymous analyst Plazma stated that ETH is undervalued and predicted that the ETH/BTC ratio could reach 0.1 in the coming months, equating 10 ETH to 1 BTC.

On-Chain Activity Boosting Ether's Growth

The increasing on-chain activity and scaling solutions on Ethereum have significantly influenced its performance. Data from DappRadar revealed a 7.75% surge in transaction volume among top Ethereum DApps in the past week, driven by activities in platforms like Uniswap, Eigenlayer, MetaMask, and Banana Gun. Additionally, the number of unique smart contracts on Ethereum rose from 37,870 on May 20 to 38,066 on May 31, according to CryptoQuant.

Additional data from CryptoQuant highlighted the growth in Ethereum's network activity over the last seven days, showcasing a rising number of unique smart contracts in existence on the network.

Potential Launch of Spot Ethereum ETFs in the Near Future

Apart from the advancements in on-chain metrics, the imminent launch of Ethereum ETFs is contributing to the bullish trend of ETH and its growing strength compared to Bitcoin. Senior ETF analyst Eric Balchunas from Bloomberg believes that there is a high chance of these investment products being launched by the end of June following BlackRock's essential filing update.

After BlackRock updated its Form S-1 for the iShares Ethereum Trust (ETHA) with the SEC, post the regulator's approval of its 19b-4 filing, Balchunas suggested that although there might be further filings to address SEC comments, an end-of-June release is a plausible scenario, with odds leaning towards approval around July 4.

Market observers are optimistic about the impact of potential spot Ethereum ETFs on driving ETH to new highs. Some anticipate that ETH could even reach $10,000 as institutional capital flows into Ether ETFs.

It is vital for readers to conduct their own research before making any decisions linked to the products or companies discussed in this article.