Ethereum (ETH) recorded a new ATH on Wednesday, continuing to outperform Bitcoin in 2021
Ethereum’s new $4,372.35 high has seen the coin achieve a market capitalisation of almost $500 billion, while Bitcoin struggles to remain a trillion-dollar asset. Ethereum’s year-to-date gains now stand at over 470%, while Bitcoin has managed just shy of 100% in 2021.
Reuters suggest that the rally could be fundamentals-driven, with institutional interest ramping up and the broader proliferation of decentralised finance (DeFi) apps within the Ethereum ecosystem.
ETH’s relentless price action is accompanied by bullish signals from on-chain data. Analysts Negentropic, co-founders of chain analysis firm Glassnode, noted that ETH has been flowing out of exchanges and into cold storage. This is traditionally a sign that buyers are not planning to sell any time soon.
— Yann & Jan (@Negentropic_) May 11, 2021
Similarly, analyst Lex Moskovski observed that the rally seems to be driven by spot purchases rather than intense derivative speculation. This sort of market behaviour typically underwrites a sustainable rally and prevents the market from “overheating”. Nonetheless, open interest on Ethereum futures remains high, and Ether call options demand flipped Bitcoin for the first time in April, which perhaps gives ETH more fuel for speculative upside.
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Bitcoin left behind
Ether has enjoyed particular success against Bitcoin in recent weeks. The original cryptocurrency’s extended consolidation, in play since February, has caused profit-seeking traders to look elsewhere for gains. The ETH/BTC pair recently broke out of a months-long cup and handle pattern on the weekly chart, allowing the second-largest crypto to make up some serious ground on Bitcoin.
Talk of a “flippening” abounds, and if Ether keeps up its current momentum, this doesn’t seem out of the question. Previous cryptocurrency bull cycles have witnessed an “alt season”, whereby traders suck liquidity out of the Bitcoin market and pump it into other cryptocurrencies, with Ethereum historically being a prime beneficiary. BlockchainCenter’s “Is It Altseason?” indicator is currently proclaiming a resounding ‘Yes’.
With a continued upside very much on the cards, investors and traders alike will be looking to capitalise on Ether’s rally while Bitcoin languishes.