Bitcoin’s price dropped 3.5% to as low as $66,584 on May 31 as the broader market correction reinforced BTC’s resistance at the $69,000 level. BTC is now trading 9% below its $73,835 all-time high reached on March 14.
Ether started the year strongly but began tapering off in mid-March. However, the altcoin began picking up momentum in mid-May amid anticipation of the approval of spot Ether ETFs in the United States.
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BTC drop below $68,000 leads to a marketwide sell-off
Bitcoin price fell below $68,000 at the Wall Street open on May 31, causing a marketwide sell-off that saw the global crypto market capitalization drop 2.2% over the past 24 hours to rest at $2.5 trillion, according to data from CoinMarketCap.
Other top 10 altcoins cryptocurrencies are also flashing red, with Ether down 0.8% over the last 24 hours. Solana, BNB Chain’s, Cardano and Dogecoin have slumped more than 2% over the same time period.
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Memecoin’s were also tumbling after recording an impressive performance over the last few days. Just like DOGE, Shiba Inu’s SHIB is down 6.4%. The new memecoins in Solana’s ecosystem, Dogwifhat (WIF) and Book of Meme (BOME), each recorded the largest losses of more than 5%.
Independent crypto trader Bloodgood observed the slump in memecoins, saying that when the frenzy is over, “capital will rotate to quality.”
BTC longs rekt
The broader liquidation of long positions versus the short ones has further fueled Bitcoin’s underperformance today.
Notably, the Bitcoin derivatives market has witnessed approximately $144 million worth of liquidations in the last 24 hours, out of which $105.14 million were long. When long positions are liquidated, it generally involves selling off the asset (voluntarily or by the broker), which can drive the price down further.
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Bitcoin’s open interest (OI) has flattened around $33 billion but remains lower compared to its 2024 peak of around $39.3 billion.
BTC price faces stiff resistance from the $69,000 level
From a technical perspective, Bitcoin’s price decline today is part of a failed attempt to scale higher after testing a key resistance from its old all-time highs at $69,000. This barrier has underpinned the BTC price over the last 10 weeks.
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According to this setup, following the resistance line breach, the price could climb higher, potentially steering BTC towards all-time highs above $73,800 and later into price discovery.
Although ETH has trailed Bitcoin since Jan. 1, it has outperformed the flagship cryptocurrency since spot Ether ETFs received official approval from the Securities and Exchange Commission on May 23.
Since May 15, ETH has surged approximately 30% compared to BTC’s 9% gain in their respective U.S. dollar pairs.
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There are three main reasons why ETH has been outperforming BTC throughout the past several days, including a growth in network activity and increased excitement surrounding the launch of spot Ether ETFs.
ETH trended higher against BTC in the last 10 days
Ether is up 23% over the last 10 days, outperforming Bitcoin and other top layer-1 tokens. BTC’s price has climbed only 2% over the last 30 days, while other top-cap layer-1 tokens, such as BNB Chain’s BNB and Solana’s SOL have rallied 3.35% and 1%, respectively, over the same timeframe.
The ETH/BTC ratio began ascending on May 17, reaching a two-week high of $0.05854 on May 23, a 31% increase.
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From a technical point of view, the ETH/BTC weekly chart showed a bullish divergence from the relative strength index, suggesting that a “trend reversal had started,” as observed by trader and founder of MN Trading Michaël van de Poppe. This ratio is considered bullish as long as the ratio remains above 0.051.
“ETH is absurdly undervalued,” pseudonymous analyst Plazma declared in a May 31 post on X, adding that the ETH/BTC ratio will hit 0.1 within a few months and “10 ETH will be equal to 1 BTC.”
Increasing on-chain activity underpins Ether’s outperformance
Ethereum’s network activity and scaling solutions contribute to its performance. Data from DappRadar shows a 7.75% increase in transaction volume among top Ethereum decentralized applications (DApps) over the past week, fueled by decreases in Uniswap, Eigenlayer, MetaMask and Banana Gun. The number of unique smart contracts on Ethereum also rose from 37,870 on May 20 to 38,066 on May 31, according to CryptoQuant.
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Additional data from CryptoQuant reveals an increase in Ethereum’s network activity over the last seven days.
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Spot Ether ETFs may launch in June
Besides strengthening on-chain metrics, the likelihood of Ether ETFs making their market debut soon is adding to ETH’s bullish momentum and increasing strength against Bitcoin.
Bloomberg senior ETF analyst Eric Balchunas believes these investment products have a “legit possibility” of launching by late June after BlackRock updated a key filing necessary for launch.
BlackRock updated its S-1 form for its iShares Ethereum Trust (ETHA) with the SEC nearly a week after the regulator approved its 19b-4 filing.
Market participants are optimistic that spot Ether ETFs will see ETH reach new highs as some speculate Wall Street will use it as a bet on Web3’s growth. Others speculate ETH’s price could hit $10,000 this cycle as institutional capital is rotated into Ether ETFs.
via cointelegraph