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Analysts' Insights

Analysts' Insights

Is Ethereum Outperforming Bitcoin?
- by Markus Thielen

Ethereum’s Revenue Hits Bottom — A Tactical Position in Play

The fees generated by the Ethereum network reached their lowest point on October 9th in the past three years. This signals minimal interaction with DeFi apps, NFT minting, and other activities. If weekly fees can stay above $30 million, a tactical long position in ETH (and other Altcoins) could prove to be profitable.

Ethereum weekly fees ($mln)

From Support to Soaring: Ethereum's Bullish Breakout Takes Flight

We identified $1,550 as the key support level, which held. The double breakout at $1,700 from the (1) descending trend line (black) and the breakout from the (2) bottoming formation (blue) has lifted ETH prices higher by +10%. As long as ETH remains above $1,800, traders should remain bullish.

Bitcoin's Reign Reaches Its Zenith: Dominance and Volume at Peak

Bitcoin Dominance peaked on October 26 at 53.4% and has since declined to 51.8%. Meanwhile, BTC volume was three times higher than the volume in ETH. Now, the volume is down to two times. Both indicators signal that the 'peak' interest in BTC is behind us and that Altcoins (including ETH) have a chance to outperform.

Unlocking Alpha State: Select Coins Poised to Outshine Bitcoin

When the ETH/BTC ratio is at a bottom (as it is currently [black line]), our MP Greed & Fear Indicator suggests that Altcoins (including ETH) could outperform BTC. Our indicator ([grey line]) has climbed above 50% and signals an 'alpha' state, indicating that higher beta trades could potentially offer greater returns.

Ethereum’s Secret Weapon: Volatility Bargain Compared to Bitcoin

Over the last 5 years, realised volatility has fluctuated in a range of 1.0 to 1.7 in comparison to Bitcoin. When Ethereum's volatility matches levels similar to Bitcoin, as it does now, it has historically presented an attractive opportunity for buying ETH options. Implied volatility currently stands at 58% for both.

FOMO Alert: Ethereum Funding Rate Skyrocket

The funding rates for Ethereum (and Bitcoin) futures are trading at the top of the range (>95th percentile). This signals a 16-18% premium above spot prices. Traders are currently leveraged long, and the positive sentiment could spill over into Altcoins and other higher-beta cryptocurrencies.

Written by Markus Thielen, Head of Research & Strategy at Matrixport. Author of Crypto Titans.

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