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Ethereum is breaking out against Bitcoin, and traders are betting on ETH/BTC and altcoins.
On April 21, the price of Ether (ETH) in its Bitcoin (BTC) pair is in the pink, touching the highest levels since early February. Given the technical breakout of ETH/BTC, traders are starting to anticipate a significant rally in the near future.
During the first two weeks of April, Binance Coin (BNB), the native token of Binance Smart Chain, outperformed ETH.
The high transaction fees on Ethereum, along with the high consumer engagement on Binance Smart Chain, caused BNB to gain traction against Ether.
However, in recent days, the price of ETH has begun to rise against both Bitcoin and BNB, the first and third biggest cryptocurrencies in the global sector, respectively.
Why is ETH rallying against Bitcoin?
The altcoin market has gained against Bitcoin in the last 24 hours, led by Ether, leading the Bitcoin Dominance Index to sink to 50.7 percent on CoinMarketCap, the lowest level since summer 2018.
One of the primary reasons for the altcoin rally is that altcoins typically saw sharper declines than BTC after the Coinbase listing.
As a result, as Bitcoin continued to consolidate and recover, altcoins began to see a relief rally, led by the strength of Ethereum and BNB.
Following the recovery of the derivatives market following over $10 billion in liquidations in a single day, the demand for risk-on investments within crypto is likely to have increased.
This fueled appetite for Ethereum, BNB, Dogecoin (DOGE), and a slew of other cryptocurrencies with high volume and valuation.
In the short term, traders believe that the ETH/BTC pair’s breakout would lead to a wider parabolic rally, especially for altcoins.
A trader going by the alias “Crypto Capo” shared excitement about ETH’s breakout against BTC.
“$ETH/BTC is going to redefine the concept of parabolic.”
Similarly, a cryptocurrency derivatives trader NekoZ said that ETH is showing strong momentum, which would likely spill over to altcoins.
The trader noted:
“Love the reaction we are having so far. Should carry nicely into the week and build momentum around alts.”
Another well-known cryptocurrency derivatives trader known as “Bluntz” said that ETH/BTC seems “insane” after a huge capitulation case.
A capitulation case occurs when the price of a commodity bottoms out following a sudden decline.
Bluntz stressed that ETH has a double bottom chart, which in technical research often indicates a short-term pattern reversal.
“ETH double bottom on 4h, and ETH/BTC looks absolutely insane again. Wow that was the greatest capitulation event I can remember for a long time. Even i capitulated most of my lev trades.”
On-chain data is also bullish
According to the data from CryptoQuant, the amount of ETH being staked in the Ethereum 2.0 deposit contract is rising.
This reduces the circulating stock of ETH on markets, which could push up the price of ETH.
The growth in fees, which can be verified using on-chain data, also means that operation on Ethereum is increasing considering the already high fees.
Aftab Hossain, an Ethereum and investor, said:
“Ethereum / DeFi has focused heavily on infrastructure, which BSC was able to copy and centralize to make it faster with an incentive to focus on integrated UX i think cheaper L2 tx’s will enable for greater scaling and will allow for critical smart contract wallet innovation.”
Binance Smart Chain and other layer ones have outperformed Ethereum, but the arrival of Eth2 and layer two solutions could make Ethereum more appealing to casual users in the coming months.