According to U.Today, the Bitcoin-to-Ethereum ratio, a significant measure of market sentiment and relative strength between the two leading cryptocurrencies, has signaled a potential shift that could greatly impact the direction of the crypto market. This ratio, which compares the price of Bitcoin, the largest digital asset, with Ethereum, the second-ranked, suggests a possible decrease in risk appetite for alternative cryptocurrencies.
The Bitcoin-to-Ethereum ratio indicates which of the two cryptocurrencies is gaining or losing ground against the other. A rising ratio signifies that Bitcoin is outperforming Ethereum, while a falling ratio suggests the opposite. The BTC/ETH ratio reached 20.76 in a recent trading session, its highest level since April 2021. This trend suggests a stronger demand for Bitcoin, the oldest and most established cryptocurrency, over Ethereum.
Analysts from QCP Capital, as cited by Bloomberg, suggest that this trend could be an early warning of FOMO — fear of missing out — turning into 'fear' if Ethereum is used as a proxy for sentiment toward smaller tokens or alternative cryptocurrencies. A contributing factor to Bitcoin's dominance could be the growing institutional interest in the cryptocurrency. Bitcoin reached a new high of $73,798 in mid-March, propelled by a wave of inflows into dedicated U.S. exchange-traded funds that debuted in January.
However, Bitcoin has pulled back by around 9.33% from its all-time high as ETF demand has cooled, and alternative cryptocurrencies have also declined. The ETF-led Bitcoin surge has slowed over the last three weeks, partly due to economic indicators suggesting higher-than-expected interest rates. At the time of writing, BTC had dropped 0.37% in the previous 24 hours, reaching $66,563. Ethereum, the second largest cryptocurrency by market value, lost more than Bitcoin in the last 24 hours, falling 3.06% to $3247. Most alternative cryptocurrencies, or altcoins, suffered even greater losses than Bitcoin and Ethereum.