Bitcoin Dominance Threatened by Ether ETF Launch

Bitcoin (BTC) and Ether (ETH) experienced a decline of 3.5% on May 24, following the long-anticipated institutional milestone that did not manage to invigorate the markets. Investors were left disappointed as Bitcoin and Ether did not rally in response to the news that U.S. regulators had given the green light to launch spot Ether exchange-traded funds (ETFs).

According to data from Markets Pro and TradingView, the price movement of BTC lingered around $67,000, while ETH was priced at $3,670. The muted market reaction was unexpected, considering that the approval of these ETFs represented a significant achievement for the cryptocurrency industry. This decision marked a notable policy reversal by the Securities and Exchange Commission (SEC). The ETFs were not yet ready for trading, with further preparations required that could delay their launch for several weeks.

Bloomberg Intelligence analysts James Seyffart and Eric Balchunas speculated that the ETFs might be approved by mid-June. Consequently, BTC/USD and ETH/USD did not experience an upward surge; instead, both cryptocurrencies retreated from their local highs as the trading day came to a close.

Market participants were also keenly observing the interplay between Bitcoin and Ether, the two leading cryptocurrencies. Notably, trader Daan Crypto Trades highlighted the potential impact of the Ethereum ETFs on Bitcoin’s market dominance. He noted that the recent rally in ETH caused Bitcoin dominance to decrease, and suggested that if anything could reverse this trend, it would likely be the launch of the Ethereum ETF. He pinpointed 52% and 48% as the crucial levels to watch.

Other traders shared the sentiment that the approval of the Ethereum ETF might herald the onset of a new “altseason.” Bitcoin dominance peaked at 57% in mid-April, right before its block subsidy halving – a high not seen in over two years. This uptrend is at risk, according to traders, as funds might shift towards altcoins, driven by the Ethereum ETF excitement.

In terms of the BTC price reaction, trader Skew identified $66,000 as a critical zone where buyers might start stepping in. In his analysis shared on May 23, Skew pointed out that this zone contained significant bid liquidity, particularly on Binance, one of the world’s largest cryptocurrency exchanges. He emphasized that observing the reaction in this zone would be crucial to understanding the absorption of sellers and forecasted that the current price range of $72K – $76K was supported by spot supply.

Skew further elaborated that the week’s price movements were primarily driven by activity on spot exchanges, specifically highlighting Binance and Coinbase, a major U.S.-based trading platform. This insight underscores the role of these exchanges in driving current market dynamics.

As the market continues to process the implications of the soon-to-be-launched Ethereum ETFs, both Bitcoin and Ether remain in a state of flux. The anticipation surrounding the ETFs, coupled with ongoing market activity, sets the stage for potentially significant shifts in the crypto landscape. Traders and investors alike are keeping a close watch on these developments, as they may herald new opportunities and shifts in market dominance.

Despite the significant regulatory milestone achieved with the approval of spot Ether ETFs, the immediate market reaction has been tepid. Analysts and traders are now focused on key price levels and the potential broader impact on the cryptocurrency market, especially concerning Bitcoin’s dominance and the emergence of a new altseason. As preparations for the launch of these ETFs continue, the crypto market is poised for further developments that could redefine its trajectory in the coming weeks.