ETH Price Outshined BTC by $30B Last Week: Why, and What Next?

Ethereum (ETH) price once-again broke above the coveted $3,000 territory on Saturday, Feb 24 bringing its gains for the week to the 8% mark. Meanwhile, Bitcoin struggled for momentum, twice coming close to losing the vital $50,000 support.

With more capital flowing into ETH derivatives markets in the past week, is it a precursor for an Ethereum price rally to $3,500? 

Ethereum price outperformed Bitcoin in the past week 

In the past week, Ethereum price has outperformed Bitcoin (BTC) by a healthy margin, thanks to growing mumbles surrounding ETH ETF fillings, and early stakeholder gains from the just-concluded Dencun upgrade. 

The chart below shows that ETH price grew 8% between Feb 18 and Feb 24, outpace Bitcoin which apparently remained stagnant within the narrow $50,700 to $51,700 range for the better part of the week. 

Ethereum’s valuation grew by $30 billion as the market capitalization of the pioneer smart contract network surged from $333 billion to $363 billion at the close of the week on Feb 24. In contrast, the Bitcoin market cap has stagnated around $1.01 trillion. 

Ethereum Received $600 million Capital Inflows, While Bitcoin Tumbled 

While the Dencun upgrade and ETH ETF speculations dominated media headlines, core market data shows that capital flows across the derivative markets for the two largest crypto currencies was a major catalyst that saw ETH price outperform Bitcoin. 

The Santiment chart below compares the capital flows across Bitcoin and Ethereum derivatives markets over the past 10 trading days. It shows that ETH Open Interest grew from $5.1 billion to $5.7 billion, an 11% jump, between Feb 14 and Feb 24.

Meanwhile, BTC Open Interest has dipped from $10.1 billion to $9.7 billion, representing a 4% drop in capital stock. 

Open interest essentially, sums up the total value of capital currently invested in active futures contracts for a specific cryptocurrency. 

Given the historical correlation between Ethereum and Bitcoin, this divergence in their open interest trends suggest that traders are showing strong preference to invest in ETH ahead of BTC in the recent weeks. 

Secondly, considering that BTC year-to-date growth had outperformed ETH up until Feb 14, it could also mean that investors are exiting BTC markets to reinvest their profits into ETH, possibly, with a conviction that the upcoming halving could hurt Bitcoin price prospects, while Ethereum ETF decision expected in May could spur more gains. 

These diverging narratives could see the Ethereum price further extend its lead over Bitcoin in the coming weeks.