Ethereum’s native token, Ether (ETH), gained more than 15% in the first 12 days of October. But compared to Bitcoin’s (BTC) 30% gains over the same period, the second largest cryptocurrency is currently in a downtrend when priced into BTC.
By October (and into the fourth quarter of 2021) the ETH / BTC exchange rate had fallen by over 12%, reaching 0.060215 BTC on October 12 for the first time in more than two months.
ETH / BTC daily price chart. Source: TradingView
The decline also pushed ETH / BTC below one of its oldest support areas, the 200-day exponential moving average (200-day EMA; the orange wave), as shown in the graph above. This increases the risk of another downtrend as 0.055304 BTC serves as the next possible target.
Bitcoin dominance rises on ETF hopes
Further evidence of ETH / BTC’s weakness came from Bitcoin’s increasing dominance in the crypto market.
In detail, the Bitcoin Dominance Index, which measures the capitalization of the flagship cryptocurrency versus the rest of the crypto market, rose from 42.39% on October 1st to 46.64% on October 12th. On the other hand, the dominance of ether dropped from 18.15% to 17.57% over the same period.
Daily chart of the Bitcoin Dominance Index. Source: TradingView
This shows that by October, more capital flowed into the Bitcoin market than Altcoins.
Related: Institutional Crypto Products Record AUM As Investors Stack In Bitcoin
Bitcoin’s rising dominance coincided with expectations that the US Securities and Exchange Commission could approve four Bitcoin-based exchange-traded funds (ETFs) within a few weeks. The applicants are Global X Bitcoin Trust, Valkyrie XBTO Bitcoin Futures Fund, WisdomTree Bitcoin Trust and Kryptoin Bitcoin ETF.
SEC chairman Gary Gensler hinted at an optimistic outcome for Bitcoin ETFs, despite the SEC’s eight consecutive denial of similar requests. Gensler noted that this time around, however, the Bitcoin ETF applicants were filed under the Investment Company Act of 1940, which offers greater investor protection.
Earlier this week, two “light” Bitcoin ETFs started trading in the US, namely Invesco Alerian Galaxy Crypto Economy ETF (SATO) and Invesco Alerian Galaxy Blockchain Users and Decentralized Commerce ETF (BLKC). However, the funds invest 80% of their assets in crypto-related companies, not Bitcoin itself.
SATO ETF 15-minute price chart. Source: TradingView
The SEC also approved a third crypto-stock ETF. Known as the Volt Crypto Industry Revolution and Tech ETF (BTCR), the fund will “get exposure to companies that hold a majority of their net assets in Bitcoin or derive much of their income from Bitcoin mining, lending or trading.”
Bitcoin going “insane”?
James Seyffart, an ETF analyst at Bloomberg Intelligence, said the news was “very bullish” on Bitcoin. Similarly, independent market analyst Lark Davis also predicts “insane” market reactions should the SEC approve a Bitcoin ETF with exposure to actual BTC.
I don’t think people are fully prepared for how crazy the markets are going to get once we get a #bitcoin ETF approved!
– Lark Davis (@TheCryptoLark) October 8, 2021
So it appears that speculation over the past few days about Bitcoin ETF approval has increased traders’ appetites for the top cryptocurrency, with BTC outperforming its top rivals including Ether.
Nonetheless, Ethereum has a strong decentralized application ecosystem and remains the key force behind the booming sector of decentralized finance and non-fungible tokens.
David Gokhshtein, founder of Gokhshtein Media and PAC Global, noted that Ethereum’s healthy network effect could bring Ether to $ 10,000 by the end of this year. In the meantime, as Cointelegraph reported, a persistent supply shortage in the ether market should remain a major talking point for the bulls moving forward.
The views and opinions expressed are those of the author only and do not necessarily reflect the views of Cointelegraph.com. Every step of investing and trading involves risk, so you should do your own research when making a decision.