Today, the Ether market is outshining the broader crypto market, notably surpassing BTC in what seems to be a typical rally following a Bitcoin halving event.
Ether price is up today, rising 4.25% to reach approximately $3,200 on April 21. The cryptocurrency’s gains mirror upside moves elsewhere in the crypto market, with the latter’s total market capitalization rising 3.5% in the same period.
Let’s review the main reasons behind Ether’s outperformance versus the broader crypto market today.
Capital rotation from Bitcoin to Ether market
Today’s gains in Ether versus the U.S. dollar are largely driven by capital inflows in the Bitcoin market.
Notably, the ETH/BTC pair is up roughly 2.5% in the last 24 hours to reach 0.048 BTC on April 21. Consequently, the Ethereum Dominance Index (ETH.D), which tracks Ether’s market strength versus the rest of the crypto market, grew by over 1% in the same period.
These gains are part of a rebound that began on April 19, coinciding with Bitcoin’s fourth halving. Since that pivotal event, the ETH/BTC ratio and ETH Dominance (ETH.D) have increased by approximately 3% and 0.75%, respectively.
Historically, the Ethereum market has often seen increased capital inflows from the Bitcoin market shortly after each Bitcoin halving event.
For example, following the second halving in July 2016, the ETH/BTC pair surged by as much as 64%. Similarly, after the third halving in May 2020, this pair saw an increase of nearly 100%.
This pattern suggests that investors tend to either sell their BTC holdings or reduce their demand for Bitcoin once the halving occurs, as the anticipated price increase leading up to the event is usually already factored into the market.
Consequently, alternative cryptocurrencies like Ether benefit from this shift in investor focus, as capital diverted from Bitcoin seeks new opportunities for growth in other parts of the crypto market.
Return of Ethereum whales
Ether’s latest gains precede a period of accumulation among its richest investors, also known as whales.
According to data resource Glassnode, the Ether supply held by addresses with a balance between 1,000 and 10,000 ETH have increased in the past two weeks.
Similarly, the Ethereum supply held by entities with a 10,000-100,000 ETH balance has also rebounded recently, indicating the return of whales to the Ether market.
Interestingly, this accumulation pattern has often been a precursor to significant price upside, such as the one Ether is witnessing today.
Technical ETH price rebound
Ether’s gains today appear further after testing the lower trendline of its prevailing descending channel pattern as support.
Interestingly, this support level is also near ETH’s 0.5 Fibonacci retracement line at around $2,820 and its 200-day exponential moving average (200-day EMA; the blue wave) at around $2,725, showing traders see the support area as a good zone to buy Ether.
For instance, the trendline support aligns closely with ETH’s 0.5 Fibonacci retracement line at around $2,820 and the 200-day exponential moving average (200-day EMA; the blue wave) at approximately $2,725.
These converging indicators suggest traders view this support zone as an attractive point to purchase Ether.
Source: Cointelegraph.com
