Bitcoin’s dominance in the cryptocurrency market over Ethereum has been clearly evident throughout 2023 in multiple aspects such as market capitalization, trading volume, and price performance.
- Bitcoin’s market cap dominance over Ethereum currently stands at 53.3% compared to Ethereum’s 16.7%.
- The ETH/BTC price ratio has dropped below 0.05, the lowest since April 2021.
- Derivatives market data shows Bitcoin dominance over Ethereum has increased to over 60% and 70% in some cases.
- Various performance indicators suggest Bitcoin maintains a strong lead over Ethereum.
According to on-chain analyst James Check at Glassnode, various market dominance measures point to a continuation rather than a reversal of Ethereum’s declining relative interest. This is evident in the market cap dominance, trading volume ratios, and price performance between the two largest cryptocurrencies.
Dominance in Derivatives Markets
In derivatives markets like futures and options, Bitcoin’s dominance over Ethereum has surged. Bitcoin futures contract volume now accounts for over 70% of the total compared to an equal split between the two assets just one year ago. * Options volume and open interest have also been shifting towards Bitcoin since the beginning of the year.
Ethereum Considered “Overvalued”
According to analysts, Ethereum is considered “quite overvalued” next to Bitcoin when looking at the realized market cap, which is based on the price of the most recent coin movements. Any shift in this valuation would require Ethereum long term holders to sell at a loss and Bitcoin’s capital inflows to surpass Ethereum’s – a trend that appears to be in the early stages.
The 30-day change in realized cap also shows less new capital entering Ethereum ($6 billion) compared to Bitcoin ($13.8 billion). **
Superior Price Performance
Bitcoin also holds a dominant 75% of the spot trading volume between the two assets. Bitcoin’s year-to-date price increase of 162% also contrasts sharply with Ethereum’s 82% gain. Other cryptocurrencies like Solana and Cardano have recently outperformed Ethereum over the past month. ***
The overall market analysis points to Bitcoin maintaining a strong lead over Ethereum in aspects like market cap dominance, trading volume, derivatives market activity, and price performance. As such, the decline in Ethereum’s relative valuation and market interest shows no signs of reversing any time soon.