- Ethereum’s correlation with Bitcoin dropped as prices fell.
- New developments on the Ethereum network could help ETH in the future.
Bitcoin [BTC] has been in the spotlight for quite some time due to the expectations surrounding the ETF. Because of this, Ethereum [ETH] lagged behind and the correlation between the two currencies decreased.
Parting ways
According to Kaiko data, the correlation between BTC and ETH has fallen below the historical average of 0.71 for the first time since 2021. In recent months, the two cryptocurrencies have seen divergent price movements, with BTC benefiting from ETF-related hype and speculation, while ETH underwent a relatively muted rally.
For the first time since 2021, the BTC:ETH correlation fell below the historical average of 0.71.
What does this mean for a possible location? #ETH ETF approval? pic.twitter.com/qJSqVVDkbJ
— Kaiko (@KaikoData) January 18, 2024
Analyzing BTC’s performance prior to ETF approval provides insight into ETH’s potential trajectory. Over the past 365 days, BTC has witnessed a robust 100% return increase, surpassing ETH’s more modest 60% return.
However, on the day of BTC’s approval, a shift occurred, with BTC declining and ETH rising, fueled by growing expectations that ETH could be next in line for such approval.
Over the past week, ETH spot volume on Centralized Exchanges (CEXs) rose to its highest level since the FTX collapse.
Notably, there was a significant difference in volume between ETH and altcoins, which favored ETH and represented the largest difference since March 2023.
This increase in volume indicates increased market activity and interest in ETH, which may be indicative of changing dynamics within the cryptocurrency landscape.
Source: Kaiko
Developments on Ethereum
However, some factors could fuel interest in ETH in the coming months.
Aside from the possible approval of the Ethereum ETF, the new developments on the Ethereum network may also offer some hope to ETH holders.
Read Ethereum’s [ETH] Price forecast 2024-25
Recently, the Dencun upgrade was deployed to the Goerli testnet, further confirming that the development teams are making progress on development.
Additionally, the recent ACD call also included discussions about deploying the Dencun upgrade to other testnets.
Quick update from today’s ACD conversation:
– Cancun/Deneb upgrade on Sepolia and Holesky testnets remains scheduled for activation on January 30 and February 7, respectively.
– Client releases for both upgrades will be bundled and shared in a blog post next Tuesday.
– Full coverage of today’s call…— Christine Kim (@christine_dkim) January 18, 2024