The Ethereum-Bitcoin Battle: A Clash of Titans
On January 10th, the price of Ethereum briefly surpassed the $2,400 mark, experiencing a 10% increase within the week. This surge comes ahead of the highly anticipated approval of a Bitcoin ETF.
The crypto market witnessed significant volatility on January 9th, following a false announcement by the U.S. Securities and Exchange Commission (SEC) regarding the approval of a Bitcoin ETF. However, despite this controversy, the price of Ethereum has maintained a steady upward trend, reaching as high as $2,440 on January 10th.
When comparing Ethereum to Bitcoin, it is evident that crypto derivatives traders are placing larger bets on ETH. Between January 7th and January 10th, Ethereum’s price grew by 11%, overshadowing Bitcoin’s modest 4% growth. Interestingly, key metrics in the derivative market suggest that ETH may outperform BTC if the SEC delivers a positive verdict on Bitcoin Spot ETFs in a timely manner.
One important metric is the funding rate, which represents the interest paid by bullish traders to inverse traders to keep their LONG futures contract positions open. As of the morning trading hours on January 10th, ETH’s funding rate stands at 0.014%, slightly higher than BTC’s 0.12%. A higher positive funding rate for Ethereum implies increased demand for long positions in the ETH derivatives market, indicating a more optimistic sentiment.
Furthermore, open interest dynamics also support the notion that Ethereum may outperform Bitcoin. ETH’s open interest has increased by 14.6% from $3.71 billion on January 7th to $4.57 billion on January 10th, while BTC’s open interest has only seen a 5% boost during the same period. Open interest represents the dollar value of all active futures contracts for a specific cryptocurrency, and an increase indicates more new participants entering the market with fresh capital.
These trends suggest that cryptocurrency traders are betting on Ethereum to deliver greater price gains in the coming days, despite Bitcoin receiving more attention from the media. If this scenario continues, ETH’s price is likely to reach the $2,500 territory once again.
However, it’s worth noting that IntoTheBlock’s in/out of the money around price (IOMAP) data reveals a significant resistance sell-wall around the $2,475 range. This data shows that 567,150 addresses have acquired 398,810 ETH at an average price of $2,475. These holders, who have been in a loss position for nearly two years, may quickly book profits as the price of ETH approaches their break-even point.
On the other hand, if derivative traders continue to increase their bullish positions, as indicated by the elevated ETH funding rates, Ethereum’s price could break above $2,500 for the first time since May 2022.
In the event of a market downturn, the $2,200 support level for ETH could be crucial. The 2.85 million addresses that acquired 7.7 million ETH coins at the minimum price of $2,220 could form a strong buy-wall to prevent a prolonged downward trend in the price of Ethereum.
