Altcoins
Overtaking Bitcoin, Altcoin Surge Next?
Image by: Appic – Unsplash
For the first time in 2023, the price of Ethereum outperformed Bitcoin on several metrics, portending a fundamental change in market structure. The second-largest cryptocurrency by market cap is tracking general industry sentiment, setting new yearly highs.
At the time of writing, Ethereum price is trading at $2,300 with a profit of 4% in the last 24 hours. Over the previous week, the cryptocurrency recorded a profit of 10%, with most of the altcoin sector still lagging behind the current price action.
Ethereum price signals strength in Altcoin sector?
A report of BlockScholes published by the Deribit options platform indicates a peak in volatility in the price of Ethereum at its levels above those of Bitcoin. The change in ETH market structure suggests that traders and institutions are preparing for the start of 2024.
The report claims that the potential approval of a place in the US ETH exchange-traded fund (ETF) is behind the current price action. This new momentum suggests that the bullish sentiment above this event has shifted from Bitcoin to Ethereum.
As the chart below shows, Ethereum is seeing a higher yield than Bitcoin for the first time since July 2023. According to BlockSholes, the increase in yields has allowed ETH to resist a persistent downtrend, but Overall, the cryptocurrency’s performance remains within its annual range.
In other words, the price of Ethereum is doing better than in other periods of 2023 but has not yet resumed bullish momentum regarding Bitcoin. However, the report noted:
This reversal is not yet strong enough for us to be confident in a return to the market structure we previously expected, but indicates that the effects of speculative bets around the application of a spot ETF are not limited to BTC. This is reflected in the implied volatilities of both assets across the maturity structure, which predict similar volatility levels for both assets.
What’s Favoring an Altcoin Rally
Additionally, the report notes a decline in the US dollar, as measured by the DXY index. Risk assets can thrive as the currency tends to fall, which could hint at accommodative monetary policy from the Federal Reserve (Fed).
If Ethereum continues to gain upward momentum from its current levels, the entire altcoin sector could see further profits. The report states that most entities and traders are entering a “risk event” by the end of January 2024.
So, Bitcoin and Ethereum could see a bigger rally by then. Whichever coin prevails could reveal more information about the subsequent trend; if Ethereum outperforms, altcoins are more likely to follow.
Cover image from Unsplash, chart from Tradingview