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Ether reversed lower in late afternoon trading Tuesday, as the price of bitcoin pulled back following its brief run up to a new all-time high.
The second-largest cryptocurrency was last lower by 1% at $3,550.65, according to Coin Metrics. Earlier, it rose as much as 6.5% to $3,828.81. Bitcoin retreated about 7% after it hit a record high above $69,000.
“ETH has a significant amount of momentum behind it because it is widely used as the gateway to the many meme coins and DeFi platforms that have been surging on the back of bitcoin’s continued move higher,” said Philipp Zentner, CEO of crypto infrastructure protocol Li.Fi. “As has often happened in the past, bitcoin approaching record highs has caused a trickledown effect of adoption elsewhere in the ecosystem.”
With bitcoin up 19% in the past week, meme coins have gained about 175% during the same period, according to CoinGecko. Analysts point to them as evidence that retail investors, who have been absent for much of the recent crypto rally, are starting to return to the crypto market.
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Ether, dogecoin and Shiba Inu coin – 5D
Decentralized finance tokens have also increased almost 14%, NFT coins have climbed 20% and the smart contracts sector has gained 17%. Layer 1 tokens, which include bitcoin, ether and the Solana token, are up 21% as a group.
“As capital cycles further into altcoins, it would make sense for ETH to likely continue making gains, even if they are not as outsized as coins including Shiba Inu coin, dogwifhat, Arbitrum or others,” Zentner said.
Being one of two so-called blue-chip cryptocurrencies, ether’s performance typically lags bitcoin’s. On Monday, ether rose 5% compared to bitcoin’s 9% pop.
However, it’s also getting a lift from a batch of catalysts, including the recent rally in bitcoin and tech stocks, as well as a technical network upgrade this month and the possibility there could soon be spot ether ETFs available to trade in the U.S. Ether is up 65% for the year compared to bitcoin’s 58% after its recent runup.
“Given the relative difference in ether and bitcoin’s market cap, investors likely see additional upside growth potential in ETH relative to bitcoin in a world where both ETFs exist and they are viewed collectively as an asset class that will have continuous allocations from investment advisors and wealth managers,” said David Wells, CEO of Enclave Markets.
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