Why should investing in Ethereum be associated with positions in BNB, LINK, and LTC?

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Corrections in the cryptocurrency industry can be brutal, and Ethereum has seen one of the toughest drops in recent weeks. If the economy fell as a whole, the opinion shown by Bitcoin and Ethereum was diametrically opposed. The community’s favourite cryptocurrency, Bitcoin, was described as an asset, while ETH’s social opinion reached a new low.

According to Santiment, Ethereum seemed to be losing steam with respect to market optimism on Social weighted charts. However, historically, these positions have been considered opportunities for ETH as well. When identifying other fundamentals, a certain degree of validation can be attached to the aforementioned statement as well.

Derivatives played a role in corrections, time for role-reversal?

The ETH Put/Call Ratios have shown an interesting trend. At the time of publication, a reset had occurred, with call buys taking priority over put sales. It signalling that traders are now anticipating a rebound in the coming weeks. A similar reset was observed at the end of April, which resulted in ETH reaching its all-time high of $4,375.

Source: Skew

The ETH Put/Call Ratios have shown an interesting trend. At the time of publication, a reset had occurred, with call buys taking priority over put sales. It signalling that traders are now anticipating a rebound in the coming weeks. A similar reset was observed at the end of April, which resulted in ETH reaching its all-time high of $4,375.

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On a larger scale, selling pressure was minute

Source: CryptoQuant

Furthermore, the selling pressure on Ethereum over the last week seemed to be severe on a broader scale. According to the map above, Ethereum exchange inflows remain comparatively modest. As a result, only a small number of people could have traded after the corrections. Furthermore, the sum of ETH staked on ETH 2.0 continues to climb, so panic selling in the short term hasn’t had much of an impact on the sentiment.

Will Ethereum push the rally for these altcoins?

While Bitcoin does facilitate some control over each asset in the space, correlation charts suggest that Ethereum has a greater pull on the following assets.

The examples above show that certain properties seem to have a stronger association with Ethereum than with Bitcoin. Binance Coin has the greatest correlation, but there is a conflict of interest. Over the last few weeks, Ethereum has faced increased competition from Binance Smart Chain, as many projects have moved their tokens to the BSC to take advantage of cheaper gas fees.

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However, data show that consumers choose to retain their money on the ETH blockchain, which is considered more decentralised. In addition, Ethereum has 77,800 registered validators, while BSC has only 21 validators.

From the standpoint of execution, the argument for other assets may be made. AAVE is a DeFi lending protocol based primarily on Ethereum. Uniswap is a growing Decentralized Exchange that runs on the Ethereum blockchain, while Chainlink is mainly an ERC-20 token.

Litecoin, on the other hand, is an odd addition, particularly given that it is Bitcoin’s silver equivalent. However, as we explained in a recent post, Litecoin has been trailing ETH more than BTC since mid-2020, and this pattern is likely to continue. Nonetheless, it is worth noting that the correlation between BTC-LTC and ETH-LTC is only apart by a hair’s breadth.

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