Report: Will Ethereum Replace Bitcoin as the New Market Barometer?

Ethereum’s price action over the past 72 hours has been very chaotic, although ETH avoided huge losses on the pullback and climbed to a new all-time high at $2,644 before then. At press time, Ethereum is still struggling to maintain its upward trend after Bitcoin pulled back to $50,000.

How did Ethereum recover its losses in the first place? Why is Ethereum reaching a new all-time high price, especially when other cryptocurrencies, including Bitcoin, pull back?The answer may lie in the rise of Ethereum as an independent digital asset, which may take over from Bitcoin and once again drive the cryptocurrency craze.

Come to think of it, selling pressure has been a sore point in the cryptocurrency market over the past few days, with various indicators showing bearish signals across the board. In the case of Ethereum, however, this pressure has eased somewhat, as is also shown by the supply of Ethereum on exchanges.

According to data from Santiment, the supply of Ethereum exchanges has recently dropped to a 1-year low. This means thatThe finding that ETH is being moved from exchanges and replaced by holdings and other savings by long-term holders supports ETH’s price outlook and long-term credibility.

Since the second half of 2020, Ethereum daily demand deposits have continued to decline, also highlighting that more and more people are now holding on to their Ethereum instead of transferring them to exchanges to sell or dump.

Here, it’s worth noting that the recent price correction has contributed to keeping Ethereum’s price cycle benign, as continued appreciation may actually lead to increased risk.

Ethereum fell to $2,150 when Bitcoin fell below $50,000, butIts 30-day MVRV (MVRV is a relative indicator, which is the ratio of the circulating market value to the realized market value) is still strong in the overestimated range.This means that although Ethereum is trading around $2,500, it is possible to see more gains before the market corrects.

Ethereum’s MVRV is expected to drop before Bitcoin and the Biden-driven dollar depreciation kicks in. Therefore, there will be more upside for Ethereum once the market stabilizes.

Yet when might that be? This is a question with no definite answer. At the time of writing, Bitcoin and Ethereum are still correcting back, with Bitcoin trading below $51,000. Over the next few sessions, consider the ongoing consolidation phase that will be crucial for Ethereum to restart its rally.

If Bitcoin continues its dumping behavior, then Ethereum’s rise will likely be delayed again.

If the past 72 hours are any evidence, Ethereum is indeed following in Bitcoin's footsteps. But will this association end anytime soon? In fact, it may have already started, according to Santiment, “Ethereum’s price has finally diverged from its correlation with Bitcoin’s price, which is good news.”

Simon Peters also sees a gradual “decoupling” of Ethereum and Bitcoin, with the popular analyst noting in a recent interview with AMBCrypto,

“While Ethereum and Bitcoin have been traded in tandem for the better part of the past three years as the digital asset market has matured, investors will be looking at a broader range of assets and assessing which assets have the best long-term potential."

He added, “Bitcoin has attracted the attention of millions of investors, but Ethereum offers an alternative.Because ethereum's dollar valuation is much lower than bitcoin's, it has attracted investors who want to own the entire ecosystem, which is now much more expensive to achieve with bitcoin.” 

Despite the recent price drop, strong fundamentals, ecosystem-focused development, declining correlation with Bitcoin, and declining market dominance of Bitcoin make it possible for Ethereum to finally compete with Bitcoin’s correlation decoupling.

While doing so,The original text comes from ambcrypto, compiled and organized by Blockchain Knight, the English copyright belongs to the original author, please contact the compiler for Chinese reprint.。

The original text comes from ambcrypto, compiled and organized by Blockchain Knight, the English copyright belongs to the original author, please contact the compiler for Chinese reprint.