The Correlation Between Ethereum and Bitcoin Is Getting Stronger

Since the end of June, the correlation between Ethereum (ETH) and Bitcoin (BTC) has increased sharply, with the ETH/BTC correlation coefficient reaching 0.02.

While this figure remains low, this upward trend indicates that ETH’s price movement is increasingly following BTC’s.

Historically, high correlations between the two assets during bullish phases often precede joint rallies.

Institutional Interest in Ethereum Increases

According to information we cite from Beincrypto, institutional investors are showing increasing interest in ETH.

Data from Glassnode reveals that open interest in ETH futures contracts on the Chicago Mercantile Exchange (CME), measured by a 7-day simple moving average, has reached a record high of US$3.34 billion.

Furthermore, inflows into spot Ethereum exchange-traded funds (ETFs) have also increased, signaling institutional confidence in ETH’s growth potential.

Barriers to Retail Selling

Despite strong institutional support, ETH faces resistance from selling activity by retail traders, often referred to as “paper hands.”

Selling pressure from this group has hampered ETH’s price growth in the short term, preventing a breakout above the psychological level of $3,000 despite support from large investors.

ETH Breakout Prospects Above $3,000

With the increasing correlation between ETH and BTC, as well as strong institutional interest, ETH’s prospects for breaking through the $3,000 level are brighter.

However, achieving this breakout requires a reduction in selling pressure from retail traders and a consistent increase in demand.

If these conditions are met, ETH has the potential to follow BTC in a significant price rally.