Ethereum has settled comfortably above the $ 4,500 mark, while Bitcoin continues to trade north of $ 65,000. Now, even though the top two assets have more or less similar quarterly ROIs, BTC has seen a 49% quarterly ROI against the USD, while ETH has achieved a ROI of 55% over the same period.
Here, it cannot be denied that Bitcoin has largely been the driving force behind the crypto market’s gains.
BTC against ETH
The ‘Ethereum flipping Bitcoin’ narrative has been around for a while now. However, the direct northward movement of ETH since October 1 has further fueled the narrative that Ethereum could decouple from Bitcoin and also reverse the main asset.
Nonetheless, the fact remains that “Bitcoin is digital gold” is a much clearer and more established narrative than “Ether is oil for Dapps”.
That being said, Bitcoin’s market dominance and first-mover advantage have always fueled rallies triggered by higher BTC prices, followed by Ethereum, and then other altcoins.
In fact, most cryptos, especially Etherum, still have a strong correlation with BTC.
Notably, while the BTC vs. ETH correlation score appeared to be dropping, it still stood above 50%.
Today, around the beginning of November, the correlation carried out over one month ETH-BTC has fallen to 60%. However, he quickly picked up. At the same time, while the one-month correlation is still quite low in relative terms, it has high values, having climbed to 93% over the past month.
Decoupling may have to wait?
Looking at the price action of the two main assets, in terms of recovery, ETH outperformed BTC. Bitcoin is up 7.2x this cycle, which is still well below the 29.5x peak of the previous cycle. Even so, the same was much higher than the previous bear market’s lower multiplier at 4.9x.
On the contrary, Ethereum is up 24.3x, also below its peak of 120x in the previous cycle, but above the lowest multiplier of 7.2x in the previous bear market.
This, however, puts Ethereum ahead of Bitcoin in terms of recovery.
While BTC is digital gold, can the story of “Ethereum: Powering the Metaverse” be a game-changer for ETH? Well, it looks like the network might not be ready for the same.
As a recent Ecoinometrics report points out, the current state of Ethereum’s network “is not ready to power any kind of large-scale metaverse.” Why? Well, mainly because very few people are going to use NFTs for gaming purposes if interacting with them costs an average of $ 100 to $ 200 in gasoline.
This means that Ethereum will need mature L2 ecosystems to operate at scale, which will not happen in the near future.
That being said, given their relative price, ETH / BTC is still 50% below the all-time high it reached in 2017.
Notably, while ETH recovered and recovered better than BTC, it also fell harder during the bearish cycle. Additionally, BTC gains have been key to triggering market-wide rallies and even an Ethereum rally.
So it seems like decoupling Ethereum from BTC still looks like a distant dream. However, the two main assets could have a more parallel trajectory.