Bitcoin and ether diverge after SEC’s bitcoin ETF snafu

Bitcoin might soon have spot ETFs on US exchanges but it seems traders have already moved onto the next story: Ethereum

article-image

lagano/Shutterstock modified by Blockworks

share

Bitcoin and ether prices have diverged sharply following Tuesday’s false start with regard to spot bitcoin ETFs.

Traders pushed bitcoin $1,000 higher only moments after the US Securities and Exchange Commission posted a supposed approval of spot bitcoin ETFs on US exchanges to its X account.

Those 2% gains were wiped just as fast after the agency and Chair Gary Gensler confirmed the posts were unauthorized. 

X, formerly known as Twitter, later disclosed that the SEC’s account had been compromised after failing to enable two-factor authentication. A SIM swap of a phone number tied to the account remains the most likely explanation.

Read more: SEC will investigate, ‘determine appropriate’ steps following X account compromise

Bitcoin (BTC) and ether (ETH) are typically correlated, but their connection curiously unraveled in the hours after the SEC snafu. 

As bitcoin sank 5% upon realization that the SEC’s post wasn’t legitimate, ether did the exact opposite, rising 6% from $2,250 to $2,400. 

Those moves led the ETH/BTC ratio, which measures the cost of 1 ETH in terms of bitcoin, to bounce hard from 32-month lows of 0.048 BTC to 0.05319 BTC — an 11% recovery.

The orange line, bitcoin, has gone down since yesterday, while ether in purple has gone up

The pair’s 30-day correlation coefficient had been steadily falling since mid-Decemeber, however, when bitcoin and ether had effectively traded in tandem. 

The coefficient is now around 0.5, halfway between completely correlated and uncorrelated. Ether is now outperforming bitcoin over the year to date.

In fact, ETH is the by far best performing top-10 cryptocurrency by market cap (sans stablecoins and liquid staking tokens) since the SEC’s phony ETF post. Solana (SOL) and bitcoin have shed 5% and 4%, respectively, while ether has jumped more than 7%.

Read more: Ethereum Improvement Proposals to watch in 2024

Mike Tauckus, head of trading at boutique digital asset unit BitOoda, reasoned that ether’s outsized performance could be the result of traders looking to capitalize on hype of a potential spot ether ETF, now that a bitcoin fund seems all but a done deal.

“We’ve seen a big shift in front end skew, with traders and physical players buying downside protection should the ETF be denied or postponed further,” Tauckus wrote in a research note.

“After breaking support of .051 and trading as low as .048 yesterday, the ETH/BTC spot spread rebounded late in the afternoon and overnight…as traders may already be shifting their focus toward a spot ETH contract.”

“Implied Vols are slightly lower in the front end this morning as the market continues to wait for some REAL news on the ETF front.”

The SEC is due to weigh in on Ark and 21Shares’ spot bitcoin ETF application at some point today, with analysts and industry insiders anticipating a decision after US markets close.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

recent research

LTIPPanalysis.png

Research

This report is a retroactive analysis of Arbitrum's Long Term Incentives Pilot Program (LTIPP). We collect relevant data at a protocol level and review bi-weekly updates to analyze recipients, their strategies, and the impact of the incentives on high level growth metrics. In particular, we want to highlight outperformers and underperformers, and glean any best practices or lessons learned for protocols distributing ARB incentives in the future. The overarching goal is to synthesize lessons learned that the DAO can reference as it begins thinking about future incentives programs–namely, the working group for incentives that is being actively discussed–especially as Timeboost introduces new conditions for trading and economic activity.

article-image

BuilderNet is a new block building network designed to return more MEV and gas fees to users

article-image

Ledn’s John Glover gives some price targets to watch for bitcoin

article-image

Sponsored

AI project Zerebro intersects the spheres of artificial intelligence, finance, art, music, and culture

article-image

Allmight is focused on furthering the United States’ leadership in crypto

article-image

The conditions Charles Schwab is waiting for before jumping headfirst into crypto could take shape soon

article-image

The FCA’s director of payments and digital assets shared some takeaways from chats with crypto companies and law firms