May 31, 2024 at 16:13 GMTModified date: May 31, 2024 at 16:13 GMT
May 31, 2024 at 16:13 GMT

Ethereum eyes new all-time highs amid declining Bitcoin market share

Crypto traders now expect the newly-green lighted ETFs in the US to reduce Bitcoin’s market share, providing altcoins like Ethereum with more room to grow.

Ethereum eyes new all-time highs amid declining Bitcoin market share

The US regulatory approval of spot Ethereum exchange-traded funds (ETFs), along with growing institutional interest, has positioned $ETH for potential new all-time highs. This is further highlighted by a waning dominance of Bitcoin ($BTC) in the crypto market.

In a recent market analysis, the CEO of MNTrading, Michaël van de Poppe, predicted that ETH/USD could surpass its previous high of $4,900. This positive outlook has mainly been associated with the US Securities and Exchange Commission’s (SEC) recent notional green light for spot Ethereum ETFs following a surprise U-turn. While not fully approved for trading, these products are anticipated to positively impact Ethereum’s price trajectory.

Crypto traders now expect that these ETFs will reduce Bitcoin’s market share, providing altcoins like Ethereum with more room to grow. Van de Poppe stated, “The Bitcoin dominance has likely peaked this cycle at 58%. The valuations of altcoins are super low compared to Bitcoin. Likely the next all-time high is going to be reached for Ethereum”.

Meanwhile, the Bitcoin ETF market has seen notable changes. On 28 May, BlackRock’s IBIT surpassed the Grayscale Bitcoin Trust (GBTC) in $BTC holdings for the first time, a milestone long anticipated by market observers.

Since converting to a spot ETF in January, GBTC has steadily lost assets under management, dropping from nearly 620,000 $BTC to 287,450 $BTC. This shift highlighted the evolving dynamics of the ETF market, potentially influencing Bitcoin’s dominance in the crypto market.

Ethereum whales in action

Ethereum prices have recently edged lower, retesting the immediate support at $3,700. Despite this, there is optimism that the price will spike higher soon. 

On-chain events suggested a bullish narrative, with an increase in Ethereum addresses controlling over 10,000 $ETH. This uptick began on 20 May, when $ETH prices surged, breaking above $3,300 and $3,700.

The increasing whale activity indicated a strong buying interest in the altcoin. Crypto analyst Ali noted a rise in addresses holding more than 10,000 $ETH, suggesting whales are moving from a distribution phase to an accumulation phase. 

Glassnode data supported this, showing a decline in Ethereum’s balance on exchanges, indicating high buying pressure. This trend underscored the growing interest and confidence in Ethereum among large investors.

One notable whale is DBS, the largest bank in Singapore. On-chain analytics firm Nansen identified an address owned by DBS holding 173,753 ETH, worth $647 million. 

Despite DBS’s spokesperson denying the position on their books, the bank is known for its involvement in the crypto market, offering services like digital asset custody and a trading exchange for security tokens. This accumulation by DBS and other institutions reflected a growing confidence in Ethereum’s ecosystem.

On the flip side

While Ethereum experienced renewed institutional interest, it also became the most targeted blockchain by hackers in May, accounting for 43% of total crypto losses. The network suffered nine individual attacks, the highest among all blockchains, according to Web3 security firm Immunefi. 

The BNB Chain followed with four incidents. Together, Ethereum and BNB Chain accounted for 62% of the total losses across major chains. A significant exploit was the $21 million attack on the Web3 game Gala Games.

Ethereum’s vast array of decentralised finance (DeFi) projects makes it a prime target for bad actors. It remains the largest DeFi chain with over $64 billion in deposits, according to DeFiLlama. The Immunefi report highlighted that DeFi projects were the main target of exploiters, representing 100% of the losses.

What do the charts say?

Ethereum has experienced significant price volatility recently. On 27 May, $ETH briefly surpassed $3,900 before bears pushed the price down. Despite this, the approval of $ETH ETFs couldn’t sustain substantial growth for the coin over the past week. Currently, $ETH is trading at around $3,730 with a market capitalisation of over $448 billion.

Nevertheless, this price level is still up nearly 20% from its May lows. The daily chart shows $ETH is in a bullish breakout formation after clearing significant resistances at $3,300 and $3,700. The coin is now likely to aim for $4,100, with potential to reach its 2021 highs of $4,900.

However, the current technical indicators suggested mixed signals for Ethereum. While there has been an increase in accumulation, selling pressure remains high. Ethereum’s net deposits on exchanges are up, indicating increased selling activity. The $ETH Coinbase Premium is also red, signalling dominant selling sentiment among US investors.

$ETH’s Relative Strength Index (RSI) and Moving Average line are both in overbought positions, hinting at a possible price decline. If this trend continues, $ETH might fall to its 20-day SMA before rebounding. However, the Chaikin Money Flow (CMF) indicator stood bullish, suggesting $ETH could break above its resistance at $3,789 sooner than expected.

Investors are closely watching these technical indicators to gauge Ethereum’s next move. The mixed signals from various metrics highlighted the uncertain yet potentially promising future for the altcoin as it navigates through a volatile market environment.