Ethereum (ETH) is showing significant strength against Bitcoin (BTC), reclaiming a key trendline and sparking discussion of a potential alt season.
The cryptocurrency has been outperforming BTC since mid-May, driven by hopes for a spot Ethereum exchange-traded fund (ETF) in the United States.
Ethereum prices have risen significantly following the announcement of the approval of the Ethereum Spot ETF. The ETH to BTC ratio is currently at 0.056, indicating a significant upswing for Ethereum.
In contrast, Bitcoin is finding support at $67,000 and could fall to $65,000, while Ethereum is stabilizing at $3,700 amid rising volatility.
Since May 15, ETH has surged by roughly 30%, while BTC has only seen a modest 9% increase. This performance is reflected in the ETH/BTC ratio, which hit a two-week high of 0.05854 on May 23, a 31% increase.
Detailed analysis by anonymous crypto analysts moustache It has become clear that the ETH/BTC ratio is reversing from a multi-year support trendline. Historically, when prices bounce off this line, altcoin prices tend to trend higher.
ETF Approvals Drive Bullish Sentiment
The ETH/BTC ratio measures how well Ethereum is performing against Bitcoin, and technical analysts closely monitor this ratio, which compares the two most valuable cryptocurrencies.
While Bitcoin has been performing strongly for the past two years, the monthly chart of the ETH/BTC ratio shows a descending channel, suggesting an uptrend for Ethereum.
This trend stems from rising lows over time, suggesting that buyers are absorbing the selling pressure and keeping ETH prices higher.
Renowned Crypto Analyst Michael van de Poppe We note that the weekly chart of ETH/BTC is showing a bullish divergence from the Relative Strength Index (RSI), suggesting that a trend reversal has begun. This ratio is considered bullish as long as it remains above 0.051.
Data Source Santiment This indicates that Ethereum network activity is on the rise. The number of unique smart contracts on Ethereum also increased from 37,870 on May 20 to 38,066 on May 31. Cryptoquant.
Bullish sentiment was further bolstered by the U.S. Securities and Exchange Commission’s (SEC) approval of a spot Ethereum ETF on May 23. The move is seen as a significant milestone for Ethereum, potentially increasing its appeal to institutional investors and leading to further price growth.
Adding to the bullish outlook, 920,000 Ethereum options contracts worth $3.5 billion expired on May 31.
Historically, the expiration of cryptocurrency options contracts has been associated with price fluctuations in the market. The Put/Call Ratio (PCR), a technical indicator that reflects traders’ market sentiment, is key here.
A PCR below 0.7 is considered strong bullish sentiment, while a PCR above 1 is considered bearish. This ratio compares the number of active put (bearish) contracts to the number of call (bullish) options, with a lower PCR typically indicating a bullish bias.
Ethereum Price Analysis
Ethereum price has experienced significant fluctuations over the past week, fluctuating between a high of $3,965 and a low of $3,757. Nevertheless, the price has struggled to rise above $3,800 for the past three days, with bearish momentum prevailing.
At the time of writing, ETH was trading at $3,803.09, marking a 27% increase on a monthly basis.
With the SEC asking the company to file an amended S-1 form, bullish momentum is expected on the back of hopes for a spot Ethereum ETF.
The overall outlook for Ethereum remains positive as investors monitor further regulatory developments and market reaction.
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