Ether saw a reversal in late afternoon trading on Tuesday, as the price of bitcoin retreated following its brief surge to a new all-time high.
The second-largest cryptocurrency was down by 3% at $3,490.97, according to Coin Metrics. Bitcoin declined approximately 8% after reaching a record high above $69,000.
Ether’s price climbed as much as 6.5% at one point, reaching $3,828.81, before Bitcoin’s decline exerted pressure on the rest of the crypto market. Several top coins by market cap experienced a downturn, including Binance Coin, Ripple’s XRP, and tokens associated with Cardano and Polygon. Even meme coins, which experienced a surge on Monday, saw declines.
“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.”
However, investors remain optimistic about ether’s prospects in the near and medium term. It has benefited from the recent rally in Bitcoin and tech stocks. A technical network upgrade scheduled for this month and the possibility of soon having spot ether ETFs available for trading in the U.S. also bolster long-term investor confidence. Ether is still up 51% for the year compared to Bitcoin’s 45% after its recent surge.
“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.
