Ethereum Price Declines, Underlying Reasons
The Ethereum price has been experiencing a decline since September 2022, reaching yearly lows compared to Bitcoin. Currently, it is trading at around $1,594. However, there are indications of a potential trend reversal, according to a recent report from crypto research firm K33 Research.
K33 Research has been closely monitoring the relationship between Ethereum and Bitcoin. Their findings suggest a noticeable shift in market preferences between these two cryptocurrencies. Ethereum’s decline can be attributed to its transition from proof-of-work to proof-of-stake consensus, known as “The Merge.” Additionally, external factors such as the slowdown in the DeFi and NFT sectors have impacted Ethereum’s performance.
The analysts at K33, including Senior Analyst Lunde and Vice President Anders Helseth, explain that without strong narratives or adoption stories, Ethereum has struggled to maintain strength against Bitcoin.
Market Sentiments And Potential Catalysts
Derivative traders on the Chicago Mercantile Exchange (CME) have shown a bearish sentiment towards Ethereum. Despite a significant increase in open interest since August, the gap between ETH futures prices and its spot remains lower compared to Bitcoin.
Lunde and Helseth interpret this data as an indication that CME Ethereum traders have not paid much attention to the possibility of ETH futures ETFs being approved in the near future.
However, there is optimism among analysts at K33 regarding a potential shift as the year comes to an end. The approval of new Ethereum futures-based Exchange Traded Funds (ETFs) could reverse the current trend. These financial products could attract institutional interest and potentially drive up Ethereum’s value against Bitcoin.
Hot Take: The Future of Ethereum
Despite recent losses for both Ethereum and Bitcoin, there is hope for Ethereum’s recovery. The approval of new ETFs could bring new life to the market and attract more investors to the ETH platform. While Ethereum’s performance has been under strain, potential catalysts like ETF approvals could lead to a reversal in its fortunes.
Source: K33 Research
Image source: Shutterstock
Chart source: TradingView
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