ETH/BTC ratio falls to all-time low as ETF approval speculation grows

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The ETH/BTC ratio has been steadily declining since Ethereum completed its merger event.

Data from Paris-based cryptocurrency intelligence platform Kaiko shows that the ETH/BTC ratio has been steadily declining since Ethereum switched from PoW to PoS in September 2022. In the past 24 hours, the index fell to 0.048 – its lowest level since May 2021.

ETH/BTC ratio. Source: Kaiko

It’s no secret that the ETH/BTC ratio is an important metric for evaluating Ethereum’s performance relative to Bitcoin.

As this ratio increases, Ethereum’s strength or ability to retain value is better than Bitcoin’s, indicating the market’s preference for ETH over BTC.
On the contrary, the decline in the ETH/BTC ratio indicates that Ethereum is performing weaker than Bitcoin, thereby showing the psychology of investors chasing Bitcoin.

The ratio is more than just price fluctuations as it reflects changes in investor confidence and market sentiment between the two famous cryptocurrencies.

CryptoSlate data shows that the price of BTC has significantly outperformed Ethereum over the past year. During this period, the price of the leading cryptocurrency has increased by more than 170% to reach a 21-month high of $47,900, while ETH has only gained a modest 74%.

It can be seen that Bitcoin’s positive performance comes from the market’s optimism about the approval of the Bitcoin ETF spot. Over the past few months, several asset managers including BlackRock, VanEck, Grayscale and others have been actively meeting with the U.S. Securities and Exchange Commission (SEC) to discuss these funds. This has fueled speculation that the ETF product could be approved and start trading as early as January 11.

On the other hand, Ethereum’s low price performance is due to the launch of multiple Ethereum ETF futures last year. The ETFs have barely made a ripple in the market amid tepid demand, forcing asset manager CoinShares to describe ETH as the “least popular altcoin” compared to rivals like Solana.

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